Avoiding Unintentional Waiver Among Common Interests
Kristen M. Bush, Esq.
Schwartz Semerdjian Cauley & Moot LLP
Litigators in multi-party cases sometimes rely on the joint defense privilege or common interest doctrine to share privileged communications with third parties. The doctrine can protect communications or documents shared without the risk of waiving the privilege. However, a joint defense agreement does not necessarily protect material from disclosure. Misinterpreting the parameters of the doctrine may result in an unintentional waiver of the attorney-client privilege or the work product protection. This article explores the different approaches of the common interest doctrine in California and the federal system, with specific attention given to unintentional waiver of the protection through third party disclosure.
Common Interest Doctrine in California
The attorney-client privilege can be waived by voluntary disclosure to unrelated third parties under California and federal law. Cal. Evid. Code §912; Hernandez v. Tanninen, 604 F.3d 1095, 1100 (9th Cir. 2010). Similarly, work product protections may be waived by disclosure where the disclosure is wholly inconsistent with the purpose of protection. See Behunin v. Superior Court, 9 Cal.App.5th 844, 845-846 (2017); Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 578 (N.D. Cal. 2007). The common interest privilege is not a privilege in and of itself, but rather serves as an exception to waiver of the attorney-client or attorney work product privilege. Nidec, 249 F.R.D. at 578; United States v. Gonzalez, 669 F.3d 974, 977-978 (9th Cir. 2012) (“The Ninth Circuit has long recognized that the joint defense privilege is an extension of the attorney-client privilege.”) Because the common interest privilege “is an anti-waiver exception, it comes into play only if the communication at issue is privileged in the first instance.” Nidec, 249 F.R.D. at 578.
Unlike the Ninth Circuit, California does not recognize a joint-defense privilege per se; however, California does recognize a “common interest doctrine” which can allow privileged information to be disclosed without waiver of the privilege. See Meza v. H. Muehlstein & Co., Inc. (2009) 176 Cal.App.4th 969, 981-983. Disclosure of privileged communications to co-parties will waive the attorney-client privilege unless the following requirements are met: (1) an expectation of confidentiality; and (2) a common interest requiring disclosure in order to further the interest of the clients. Oxy Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 890-891. To avoid waiver, it is not sufficient simply to show that the parties who shared privileged information had overlapping interests pursuant to an oral understanding or a written “joint defense agreement”; the disclosure must be made with an expectation of confidentiality and be reasonably necessary to further the attorney-client relationship. Meza, 176 Cal.App.4th at 982-983.
For the common interest privilege to apply under federal law, the party asserting the privilege must show: “(1) the communication is made by separate parties in the course of a matter of common interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived.” See United States v. Bergonzi, 216 F.R.D. 487, 495 (N.D. Cal. 2003). The privilege does not require a complete unity of interests among the participants, and it may apply where the parties’ interests are adverse in substantial respects. Id. However, the parties must have “a common legal, as opposed to commercial, interest.” Nidec, 249 F.R.D. at 579.
Potential Plaintiff-Side Common Interests
Despite the frequent application of the common interest doctrine in joint defense arrangements, there are instances where plaintiffs benefit from the protections of the doctrine. In a construction defect action brought by a homeowners’ association, defendants pursued discovery of communications made between individual homeowners, the association, and the association’s counsel. Seahaus La Jolla Owners Assn. v. Superior Court, 224 Cal.App.4th 754, 763 (2014). The court found that the disclosures to individual homeowners by the association’s counsel were intended to carry out the purpose of pursuing the lawsuit in way that would not interfere with the rights of the individual homeowners, and the relationship between the association’s lawsuit and a separate lawsuit brought by a group of individual homeowners was close enough that the individual homeowners had common interests in the legal status of the association’s action. Id. at 776. The court held that the common interest doctrine preserved the attorney-client privilege when plaintiff homeowners’ association disclosed the attorney communications to the individual homeowners.
Common Interest Agreement Risks
Utilizing the common interest doctrine with an assumption that all communications exchanged between will remain privileged carries risks. Counsel must ensure that the information exchanged concerns matters on which there is a common interest; otherwise a waiver can be found. If the parties have adverse issues, caution should be exercised because it may be difficult, if not impossible, to establish either a reasonable expectation of confidentiality, or a common interest requiring disclosure in order to further the interest of the client.
The common interest doctrine only protects materials that are otherwise covered by the attorney-client or work-product privileges. The existence of a written joint defense agreement will not create a privilege for communications not covered by the attorney-client or work-product privileges. It will nevertheless provide evidence of “an expectation of confidentiality.” If called upon, the courts may perform an in camera review to determine on a case-by-case basis “the nature of the communications and the effect of disclosure” Oxy Resources California LLC v. Superior Court, 115 Cal.App.4th 874, 896.
Attorneys may also be concerned that that being privy to a non-client’s privileged communications could create duties to the non-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 Res. Cal. LLC v. Superior Court, 115 Cal.App.4th 874, 889 (2004).
Nonetheless, being privy to material confidential information through participation in a joint defense group may subject a lawyer 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. Members of the joint defense group 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).
Understanding of the common interest doctrine permits attorneys to take advantage of its protections while limiting risks of waiver. Lawyers considering sharing privileged communications with third parties should consider whether cooperation is necessary to further the client’s legal interests. If it is, steps should be taken to reach a common interest agreement that addresses concerns about the creation of attorney-client relationships and waiver.