Alabama Supreme Court Adopts A Narrow “At Issue” Waiver Approach

March 11, 2020

The “at issue” doctrine can strip away privilege when a litigant relies on her ignorance, knowledge, action, inaction, etc. in an effort to gain some litigation advantage – if in fairness the adversary should be given access to privileged communications related to the litigant’s mental state or actions. For instance, some courts require a litigant to produce privileged communications about its settlement of a claim if the litigant later seeks indemnification or contribution from a third party for the amount it paid in that earlier settlement.

Other courts take a narrower view. In Ex parte Dow Corning Alabama, Inc., No. 1171118, 2019 Ala. LEXIS 133 (Ala. Nov. 27, 2019), defendant settled a personal injury case, and later sought indemnity from a third party for the settlement amount. The third party argued that “reports, evaluations, and recommendations regarding liability exposure, potential verdict range, and settlement value . . . are relevant to establishing whether the settlement . . . was reasonable and was made in good faith.” Id. at *7-8. Thus, the third party contended that “the Dow parties have, by seeking indemnity and putting the reasonableness and good faith of the settlement in issue, waived the attorney-client privilege and the protection afforded by the work-product doctrine.” Id. at *8. The court noted that “[b]oth sides in this dispute rely on cases from other jurisdictions.” Id. at *11. The court ultimately found “persuasive those opinions in which courts have concluded that the reasonableness and good faith of a settlement in the context of an indemnity claim are to be judged using an objective standard.” Id. Thus, “proving or disproving the objective reasonableness and good faith of the settlement in [the underlying] personal-injury case does not require the production of attorney-client privileged materials or materials protected by the work-product doctrine.” Id. at *14.

As with other disputes, courts must sometimes choose from among differing approaches to privilege and waiver issues.