Common Interest/Joint Defense Privilege — Legal vs. Commercial Interests — Commercial Interest Insufficient to Afford Common Interest Protection Suffices to Avoid Work Product Waiver

From Ayers Oil Co. v. Am. Bus. Brokers, Inc., 2009 U.S. Dist. LEXIS 111928 (E.D. Mo. Dec. 2, 2009):

This action is before the court on the motion of plaintiff Ayers Oil Co. (Ayers) to compel defendant American Business Brokers, Inc. (ABB) to produce an email communication from ABB corporate president Terry Monroe to non-party Bill Fecht....

The subject email was from ABB's attorney to ABB's president. The language of the email indicates that the attorney sent it in confidence. The email contains legal advice from the attorney to the client. Clearly, the email was initially cloaked with the attorney-client privilege. ***

ABB argues that the disclosure to Fecht did not waive the privilege, because ABB and Fecht had common interests. The common interest doctrine extends the attorney-client privilege to two separate clients, who are represented by separate attorneys, who share an identical legal interest, and who agree to exchange information regarding the matter. John Morrell & Co. v. Local Union 304A of United Food and Commercial Workers, AFL-CIO, 913 F.2d 544, 555 (8th Cir. 1990); Green Edge Enters., LLC v. Rubber Mulch, LLC, No. 4:02 CV 566 TIA, 2006 WL 2623855, at *1 (E.D. Mo. Sept. 12, 2006). While a common interest in the outcome of litigation nullifies a waiver, Lipton Realty, Inc. v. St. Louis Hous. Auth., 705 S.W.2d 565, 570 (Mo. Ct. App. 1986), such a common interest must be an identical interest and a legal interest, as opposed to a merely commercial interest. Green Edge Enters., 2006 WL 2623855, at *1. A legal interest may be shared by two parties who are asserting common claims against a common adversary in the same litigation. Transmirra Prods. Corp. v. Monsanto Chem. Corp., 26 F.R.D. 572, 576-77 (S.D.N.Y. 1960).

The record of this action indicates that Fecht has a commercial arrangement with Monroe on a transaction-by-transaction basis by which commissions for commercial transactions are shared between them.*** Fecht and Monroe agreed to divide the labor necessary to complete the brokerage of a sale, with Fecht supplying industry expertise and Monroe completing contractual and financial provisions.... Fecht would receive 40% of any brokerage commission earned by ABB.... Fecht has no official position with ABB and has never owned any interest in ABB.... However, Fecht is not asserting any common claim with ABB, is not a party to this litigation to which the email relates, and shares no common adversary. Therefore, Fecht shares no legal interest in the matter, and stands only to benefit commercially, through a resulting business commission.

Thus, ABB, through Monroe, and Fecht do not share common interests legally sufficient to extend the protection of the attorney-client privilege to their communications. Monroe voluntarily disclosed the contents of an otherwise privileged email to third party Fecht, thereby waiving the document's confidentiality and the attorney-client privilege as to it.

Work Product Doctrine

[T]he protection of the work-product doctrine was not waived when the email was forwarded by the client to the third party. Although disclosure by a client to a third party may waive the attorney-client privilege, such disclosure "should not suffice in itself for waiver of the work product privilege." United States v. Am. Tel. and Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980). While disclosure of work-product to adversaries has generally resulted in waiver of the privilege, see Pittman v. Frazer, 129 F.3d 983, 988 (8th Cir. 1997); Leggett & Platt, Inc. v. Vutek, Inc., No. 4:05 CV 788 CDP, 2006 U.S. Dist. LEXIS 53008, at *3 (E.D. Mo. July 31, 2006), disclosure to nonadversary third parties does not carry the same result. Peralta v. Cendant Corp., 190 F.R.D. 38, 42 (D. Conn. 1999); Morales v. United States, No. 94 Civ. 4865 (JSR), 1997 WL 223080, at *1 (S.D.N.Y. May 5, 1997).

The work-product doctrine encourages thoughtful preparation by an attorney and looks with disfavor on opposing counsel reaping the benefits of an attorney's preparation in an adversarial system. While disclosure to an adversarial third party frustrates the goals of the work-product doctrine 1, disclosure to a nonadversary third party holds no such consequence.

[Footnote] 1. A line of cases holds a disclosure of information otherwise protected under the work-product doctrine that substantially increases the likelihood that adversaries will come into possession of the information constitutes waiver of the work-product doctrine. See generally, Samuels v. Mitchell, 155 F.R.D. 195, 200 (N.D. Cal. 1994; D'Ippolito v. Cities Serv. Co., 39 F.R.D. 610, 610 (S.D.N.Y. 1965). Given the commercial relationship between Monroe and Fecht, no basis for finding it likely Fecht will not keep the email confidential has been shown.

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