May 18, 2016 (PRIVILEGE POINT)
"Court Issues a Surprising Common Interest Doctrine Decision"
The common interest doctrine can sometimes allow separately represented clients to avoid the normal waiver implications of disclosing privileged communications to each other. However, courts take widely varying views of the doctrine's reach, and reject its applicability in about half of the reported cases — after the participants have already shared privileged communications, and therefore waived their respective privileges.
In IFG Port Holdings, LLC v. Lake Charles Harbor & Terminal District, plaintiff claimed that defendant's in-house lawyer (who jointly represented the defendant and its "direct subsidiary") waived privilege protection by sending an email to several of defendants employees — and one subsidiary employee. No. 16-cv-00146, 2016 U.S. Dist. LEXIS 42223, at *4 (W.D. La. Mar. 29, 2016). Defendant argued that such disclosure did not waive defendant's privilege, because the defendant shared a common interest with its own subsidiary. The court found the common interest doctrine inapplicable — because the subsidiary did not face any litigation threat. The court quoted plaintiff, which indicated that "it has no intention of ever making [the subsidiary] a party to this litigation." Id. At *5. Thus, the court held that defendant waived its privilege by disclosing the communication "to an employee of a non-party" — its own subsidiary. Id. Fortunately for defendant, the court also found the work product doctrine applicable, and held that disclosing the email to the subsidiary did not waive that separate protection.
This is a remarkable decision. The common interest doctrine should never have become an issue, because the in-house lawyer jointly represented the parent and its subsidiary. And the court's apparent insistence that every common interest participant must itself anticipate litigation could reward some obvious mischief — plaintiffs could threaten a number of possible defendants, but later disclaim any intent to sue one of them. All in all, cases like this highlight the risk of relying on the common interest doctrine.