New York Decision Highlights Another Common Interest Doctrine Risk

March 8, 2017

Under the common interest doctrine, separately represented clients may sometimes avoid waiving their fragile privilege protection when they disclose protected documents to each other. Nearly every court applies the doctrine only in the context of litigation or anticipated litigation.

Most — but not all — courts extend the doctrine to participants who may not themselves anticipate litigation, but whose interests are closely aligned with those who do. In 59 South 4th LLC v. A-Top Insurance Brokerage, Inc. , No. 650979/2015, 2017 N.Y. Misc. LEXIS 107 (N.Y. Sup. Ct. Jan. 10, 2017) (unpublished opinion), defendant insurance company claimed that plaintiff developer waived its privilege protection by disclosing protected documents to its general contractor (who was not a party). Plaintiff claimed that it shared a common legal interest with its general contractor, but the court rejected that argument – noting that the general contractor had assigned to the plaintiff all of its claims (including any claims against the defendant insurance company). As the court explained, because the general contractor was “not capable of mounting a common claim with [plaintiff] against defendants, the common interest doctrine does not apply to any communications between [plaintiff and its general contractor], including those between counsel for said parties.” Id. at *11. Inexplicably, the court did not address possible work product protection – which normally would have survived such disclosure to a friendly third party.

One might call this narrow common interest doctrine application the “weakest link” approach, because one participant’s failure to meet the anticipated litigation standard destroys the privilege for all of the participants. This is yet another reason to enter into common interest agreements very warily.