May 11, 2018 Top Story

Joint Defense Rule Shrouds Information Shared in Common Interest

Common interest doctrine acts as cloak preventing waiver of privilege

By Martha L. Kohlstrand

Parties with a common interest who agree to share information to defeat their mutual opponent do not waive privilege under either the attorney-client communications privilege or attorney work-product doctrine.

Parties with a common interest who agree to share information to defeat their mutual opponent do not waive privilege

Parties with a common interest who agree to share information to defeat their mutual opponent do not waive privilege

Pexels | patrice schoefolt

In Selby, et al. v. James M. O'Dea and State Farm Mutual Auto Insurance Company, the Illinois Appellate Court followed many other jurisdictions holding that litigants may share information with co-parties that implicates their common interests without waiving privilege.

Trial Court Recognizes "Joint Defense Privilege"

Between 2006 and 2009, State Farm Mutual Auto Insurance Company filed several subrogation lawsuits against Selby and others. The defendants in that litigation subsequently sued State Farm and its counsel, claiming that the subrogation lawsuits were part of a fraudulent scheme using unlicensed process servers to obtain default judgments. State Farm objected to an interrogatory seeking post-complaint communications between itself and its counsel, arguing that their joint defense agreement protected anything said between them as privileged.

Applying what it called the "joint legal defense privilege," the trial court held that these communications were protected from discovery. The court acknowledged that, although this privilege had never been recognized in Illinois, it had been recognized in federal courts and in other jurisdictions, and held that Illinois should follow suit. State Farm appealed.

Scope and Application of the Joint Defense Privilege

On appeal, State Farm argued that Illinois had already recognized the privilege in Waste Management, Inc. v. International Surplus Lines Insurance Co, which held that "when an attorney acts for two different parties who each have a common interest, communications by either party to the attorney are not necessarily privileged in a subsequent controversy between the two parties." The court concluded the Waste Management common-interest doctrine was different from the "joint defense" doctrine because Waste Management defeated a privilege claim rather than preserved it. The question in Selby was whether two parties to the common interest could protect their joint communications about that interest.
Numerous jurisdictions previously had recognized the joint defense doctrine, including federal courts sitting in Illinois, and the appellate court affirmed the trial court's decision to adopt it. The court also clarified that the joint defense doctrine was not an entirely new privilege, but an exception to the waiver rule that normally invalidates the attorney-client communications or work-product privileges.

The appellate court explored what constitutes a common interest such that the communications would fall under the exception and what types of communications would be covered by the exception. First, it held that parties sharing a "common interest" need not be perfectly aligned in every respect. State Farm's and its counsel's interests were sufficiently aligned to satisfy the standard. If the plaintiffs' case against State Farm's counsel were to fail, so would its case against State Farm. Next, the court held that statements made to further the parties' common interests in accordance with a common interest agreement were protected if they were (1) from one party's attorney to the other party's attorney; (2) from one party to the other party's attorney; (3) from one party to its own attorney, even if the other party's attorney is present; and (4) from one party to another, with either or both attorneys present.

The court declined to decide whether party-to-party communications, outside the presence of counsel, would be protected. The court also did not explore whether the doctrine extends past actual litigation to threatened litigation, and whether a written or advance agreement between the co-defendants is required. Finally, the court held that State Farm should be required to provide a privilege log of the communications it withheld based on the common interest exception and called for an in camera review of those documents by the trial court.

Practical Impacts of Selby

The Selby decision provides guidance to co-defendants who seek to share information in their joint defense, but want to avoid waiving the attorney-client or work-product privileges. "Selby joined a long line of federal and state cases recognizing a common interest exception to waiver of privilege," observes Blanca F. Young, San Francisco, CA, cochair of the ABA Section of Litigation's Trial Evidence Committee, adding that it is surprising that Illinois had not recognized the doctrine previously.

The joint defense doctrine is not a license for counsel to be reckless about the types of communications that are shared under a common interest. "Although the court endorsed the concept, the doctrine does not create an impenetrable umbrella. The party asserting the privilege must carefully detail the covered communications in a privilege log and ensure that each entry fits one of the protected types of communication," warns Daniel D. Quick, Troy, MI, cochair of the Section of Litigation's Trial Practice Committee.

To help protect such communications, "a written common interest agreement can help preserve the privilege," opines Young. "The parties entering such an agreement won't always have perfectly aligned interests," adds Quick, "so they will want to reserve certain rights, such as the ability to claw back documents that are unintentionally exposed to the other party."

 

Martha L. Kohlstrand is a contributing editor for Litigation News.


Hashtags: #commoninterest, #commoninterestdoctrine, #jointdefense, #jointdefenseagreement, #jointdefenseprivilege

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