August 2015 | Earn one hour of MCLE Credit in Legal Ethics
By Amy Bomse
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California lawyers, particularly defense litigators, rely on
the joint defense “privilege” or common interest doctrine to share privileged
documents and communications with third parties without risking waiver.
Transactional lawyers may not realize that the doctrine can protect
communications or documents shared between negotiating adversaries from
discovery in certain circumstances.
All lawyers who intend to rely upon such protection should
understand the nature of the doctrine as well as the potential risks entering
into such arrangements might pose. This article describes the development of
the common interest doctrine in California, its differences from the federal
counterpart, its application in less traditional contexts and certain ways to
mitigate the risks arising from a common interest arrangement.
History of the joint
defense doctrine in California
Under California and federal law, attorney-client privilege
is generally waived by voluntary disclosure to unrelated third parties. See,
e.g., Weil v. Inv./Indicators, Research &Mgmt., Inc., 647 F.2d 18
(9th Cir. 1981); Cal. Evid. Code §912. Work product protection may
also be waived by disclosure, however only where the disclosure is wholly
inconsistent with purpose of protection. See Raytheon Co. v. Superior Court,
208 Cal. App. 3d 683, 689 (1989); Nidec Corp. v. Victor Co., 249 F.R.D.
575 (N.D. Cal. 2007).
On occasion, separately represented parties want to have
their lawyers work together. For example, co-defendants may wish to pool
resources for efficiency or to ensure a consistent approach to their defense.
To facilitate that sharing, originally among criminal defendants, courts
outside of California developed the concept of a joint defense privilege. The
concept has expanded to include non-criminal defendants, plaintiffs and even
non-litigants. See OXY Res. Cal. LLC v. Superior Court, 115 Cal. App.
4th 874, 889 (2004) (“OXY Resources”) (noting the expansion of the joint
Starting about 20 years ago, California courts confronted
the question of whether California law would provide a similar protection for
information sharing between parties with common interests. In California,
unlike under federal law, privileges are creatures of statute. Courts have no
power to create new privileges, and the California Evidence Code does not
include a joint defense privilege for separately represented parties. Thus,
California courts held that there is no joint defense privilege. Raytheon
Co., 208 Cal. App. 3d at 689. To provide some protection, California courts
recognized that they could shelter shared communications under Evidence Code
section 912, which states that a disclosure does not waive privilege if such
disclosure is (a) confidential and (b) reasonably necessary for the
accomplishment of the purpose for which a lawyer was consulted. To avoid
suggesting the existence of a separate privilege, California courts refer to
the joint defense or common interest doctrine rather than privilege. See OXY Resources, at 889-94.
To determine whether the common interest doctrine applies,
California courts consider three elements. First, the exchanged communication
or document must itself be privileged under a statutory privilege (e.g.,
attorney-client communication or marital privilege) or protected by the work
product doctrine. Second, the party who shared the privileged communication or
protected document must have had a reasonable expectation that it would be kept
confidential. Even communications shared with a large group, however, may be
protected by the common interest doctrine if the lawyer has taken steps to
ensure confidentiality, such as instructing the recipients to keep the
information confidential. See Seahaus La Jolla Owners Ass’n v. Superior
Court, 224 Cal. App. 4th 754, 774 (2014) (communications by counsel for
homeowners association shared at a meeting of all homeowners were protected by
common interest). Third, the communication must be shared to advance the
purpose for which the lawyer was consulted. See OXY Resources, at 894.
Various practical consequences flow from the fact that
California recognizes a common interest doctrine rather than a privilege for
joint defense. First, a privilege log should not identify documents as
protected only by “common interest” but should instead identify the applicable
privilege or cite the work product doctrine. See OXY Resources, at 894
(compelling production of documents asserted to be protected solely by the
“common interest privilege). Second, where the common interest is not obvious
(such as where parties who shared privileged communications based on their
“common interest” are adversaries), courts may scrutinize claims that the
documents were shared to further a common legal purpose and may even order in
Not just for litigators
Although the common interest doctrine is probably invoked
and utilized more frequently by litigators than transactional lawyers, some of
the key early common interest cases involved communications between parties to
a business negotiation. See STI Outdoor v. Superior Court, 91 Cal. App.
4th 334, 340 (2001) (“We are not persuaded that the attorney-client privilege
is limited to litigation-related communications.); OXY Resources, at 889
(“The need to exchange privileged information may arise in the negotiations of
a commercial transaction.”). However, while communications outside of
litigation may come under the rubric of the common interest doctrine, such
communications must be shared for a legal purpose, not a business purpose.
In an early case recognizing the common interest doctrine in
business negotiations, the court held that a vendor and government agency could
shield their negotiations from discovery in a subsequent suit by a competitor.
See STI Outdoor v. Superior Court, 91 Cal. App. 4th 334 (2001). Although
the parties who had shared the information were adversaries, the court held
that once they had entered into a letter of intent, they shared an interest in
finalizing their negotiations that justified protecting the privileged
information they shared.
On the other hand, sometimes courts find that parties’
interests are so fundamentally different that there can be no common interest.
In Citizens for Ceres v. Superior Court, 217 Cal. App. 4th 889 (2013),
Wal-Mart sought approval to develop a shopping center in the City of Ceres.
During the environmental study phase, Wal-Mart and the city entered into common
interest agreement. They took great care to involve their attorneys in all
discussions and to document their shared anticipation that the development
would be the subject of a legal challenge. The court granted a motion to compel
production of their shared communications, reasoning that the city and the
developer could not have a common interest in the development because the city
was required to remain neutral until the project was approved.
Similarly, a defendant cannot share privileged information
with one litigation adversary and assert the privilege as to others. This issue
arises, for example, when a company faces claims from a government agency and
private civil litigants. Some companies have attempted to cooperate with the
government by sharing privileged information under a purported common interest
in ferreting out corruption, with the goal of preventing their civil litigation
adversaries from obtaining the information under a waiver theory. California
courts have rejected the notion that a company that is being investigated by
the government has any common interest with the government. See, e.g., McKesson HBOC, Inc. v. Superior Court, 115 Cal. App. 4th 1229 (2004).
Companies engaged in a sale or merger, or trying to attract
investors, may wish to share their counsel’s legal advice about the strength of
their intellectual property assets. Attorneys should proceed with caution in
this arena, because federal court decisions are inconsistent about the
applicability of the joint defense privilege. (The issue arises principally in
federal court where patent litigation occurs.) If protection is critical,
before the client shares privileged information with a buyer or investor an
attorney should research the relevant jurisdiction and advise the client of the
risks of waiver. The following cases illustrate the variety of views.
Documents shared between seller and buyer protected by
joint defense privilege: In Hewlett-Packard Co. v. Bausch & Lomb,
Inc., 115 F.R.D. 308 (N.D. Cal. 1987), the plaintiff sought to compel
production of a legal opinion defendant had shared with a potential buyer. The
plaintiff argued that the defendant had waived the privilege by sharing it with
the potential buyer. The court denied the motion. It held that the seller and
potential buyer had a common interest, because the seller and buyer could
reasonably anticipate being named as co-defendants in a patent infringement
lawsuit if the sale had occurred. The fact that the sale was ultimately not
consummated did not change the analysis.
Documents shared between seller and buyer not protected
by joint defense privilege: In Oak Industries v. Zenith Industries,
1988 WL 79614 (N.D. Ill. 1988), the patent plaintiff sought to take a 30(b)(6)
deposition of the defendant concerning defendant’s communications with a
potential purchaser. The defendant opposed the motion, arguing that it had shared
privileged communications about its patents and those were protected by the
joint defense privilege. The court disagreed, holding broadly that a party
waives its attorney-client privilege by disclosing confidential information to
a potential purchaser.
Documents shared between company and investor not
protected by joint defense privilege: In Nidec Corp. v. Victor Co.,
249 F.R.D. 575 (N.D. Cal. 2007), the plaintiff sought access to documents the
defendant had shared with a potential investor about defendant’s patents. The
court rejected the defendant’s argument that the documents were shared in
pursuit of a common legal interest. Because the investor would not likely end
up as a defendant in litigation, the court found that the seller had shared its
lawyer’s advice to further a business interest, not a legal interest. Id.
at 580. (“[I]t was designed to further not a joint defense in this litigation,
but to further a commercial transaction in which the parties, if anything have
opposing interests.”). The court did note, however, that if the documents
qualified as work product under federal law, the fact that they were shared
with the investor would not necessarily render them discoverable. While this
may give negotiating parties some leeway, attorneys should keep in mind that
federal work product protection applies only to materials prepared in
anticipation of litigation. Fed. R. Civ. Proc. 26(b)(3)(A). In California, by
contrast, the work product doctrine applies to non-litigation attorney-prepared
documents as well. See State Comp. Ins. Fund v. Sup. Ct., 91 Cal. App. 4th,
1080, 1091 (2001).
Risk of participating in a
common interest agreement
Attorneys may worry that being privy to a non-client’s
privileged communications may create duties to the non-client (including duties
that could conflict with duties the attorney owes to his own client) or create
an implied attorney-client relationship with members of a joint defense group.
Some federal decisions have suggested that an implied attorney-client relationship
can be created as a result of a joint defense agreement. See U.S. v. Henke,
222 F.3d. 633 (9th Cir. 2000) (joint defense agreement establishes implied
attorney-client relationship); but see U.S. v. Stepney, 246 F. Supp. 2d
1069, 1080 (N.D. Cal. 2003) (“Courts have consistently viewed the obligations
created by joint defense agreements as distinct from those created by actual
attorney-client relationships.”). California courts have rejected the notion
that participation in a common interest group expands the attorney-client
relationship to non-client members of the group. See OXY Resources, at
Nonetheless, actually being privy to material confidential
information through participation in a joint defense group may subject a lawyer
(and his law firm) to disqualification if he goes to work for the law firm
representing the other side of the same case. See Meza v. H. Muehlstein
& Co., 176 Cal. App. 4th 969 (2009). In Meza, an attorney who
had participated in joint defense strategy sessions with a group of
co-defendants went to work for the plaintiff’s firm. At the plaintiff’s firm,
he was screened from the case. Certain members of the joint defense group who
were still in the case moved to disqualify the plaintiff’s firm. The court held
that they had standing to do so and disqualified the attorney and his firm.
To avoid potential disqualification, parties and lawyers
should agree that each client is represented only by his or her own attorney
and that no party will have the right to seek the disqualification of other
attorney members of the joint defense group. Including appropriate consents in
a common interest agreement should significantly limit that risk. See In re
Shared Memory Graphics LLC, 659 F.3d 1336, 1339 (Fed. Cir. 2011).
When friends become foes
Parties also want to make sure that their confidential
information remains protected. To mitigate the risk of confidential information
ending up in the hands of an adversary, parties can and should agree that any
privileged information they exchange will remain confidential and cannot be
disclosed or used for any purpose other than the parties’ joint effort, even in
the event that the common interest agreement ends or members of the common
interest group become adversaries. See Price v. Charles Brown
Charitable Remainder Unitrust Trust, 27 N.E.3d 1168 (Ind. Ct. App. 2015)
(parties to a joint defense agreement precluded from using against each other
materials shared pursuant to the JDA). Unless parties expressly waive their
rights to sue one another, participating in a joint defense group does not
preclude one member from asserting claims against another. Id.
Some courts have ruled that applicable privileges are waived
between the parties to a common interest agreement when they assert claims
against each other, even when the parties have agreed to preserve the
applicable privileges. See, e.g., In re Taproot Sys., Inc., 2013 WL
3505621 (E.D. N.C. 2013) (citing various authorities). In criminal cases, where
it is not uncommon for a co-defendant to agree to testify for the prosecution
in exchange for leniency, some federal courts hold that when a defendant
chooses to testify for the government, she waives her right to confidentiality
of information shared in a joint defense group. See U.S. v. Stepney, 246
F. Supp. 2d 1069 (N.D. Cal. 2003); U.S. v. Almeida, 341 F.3d 1318 (11th
With a clear understanding of the common interest doctrine,
attorneys can take advantage of its protections while limiting associated
risks. Before sharing privileged communications or work product with third
parties, lawyers should consider whether cooperation is necessary to further
the client’s legal interests and, if it is, document that fact in a common
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