Shared Business Interests Aren’t Enough to Invoke ‘Common Interest Doctrine’ Rule

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Jan. 14 — A litigant waived the attorney-client privilege by passing along legal advice he received to third persons with whom he shared a “joint business interest” but not a “common legal interest,” the U.S. District Court for the Western District of Washington held Jan. 14.

“While [the] initial conversation with [counsel] may be privileged, divulging or paraphrasing such advice to a third person waives the privilege regardless of a joint business interest,” Judge Benjamin H. Settle wrote.

But a shared business interest may be enough to support a claim of work product protection over at least some of the same information, Settle added.

Rooting Interest Insufficient

The ruling orders Eagle Harbor Holdings LLC, a technology development company that is suing Ford for patent infringement, to produce e-mails that the CEO of its subsidiary sent to business partners at manufacturers that collaborated with Eagle Harbor on electronic systems they pitched to Ford and allegedly were misappropriated by the carmaker.

Eagle Harbor sought to withhold those communications on the ground that they contained advice the company received from its lawyers.

In doing so, the company invoked the common interest doctrine, arguing that the communications were protected under “a long line of precedent [that] seeks to promote the open communication of legal opinions among parties to a business deal that involves the validity and use of intellectual property.”

But Settle said case law makes it clear that the doctrine—which creates an exception to the rule that the attorney-client privilege is waived when a client discloses confidential legal information to third persons—requires “a common legal interest instead of a common business interest.”

“‘[A] shared desire to see the same outcome in a legal matter is insufficient to bring a communication between two parties within this exception,'” Settle wrote, quoting In re Pac. Pictures Corp., 679 F.3d 1121, 28 Law. Man. Prof. Conduct 234 (9th Cir. 2012). “‘Instead, the parties must make the communication in pursuit of a joint strategy in accordance with some form of agreement—whether written or unwritten.'”

“In light of these opinions, to the extent that Eagle Harbor asserts attorney-client privilege over communications with business partners, this is an improper assertion of the privilege even if the communication includes advice from counsel,” Settle concluded.

Work Product Protection

“On the other hand, the common interest privilege may be used to protect work-product that is disclosed to third parties,” Settle said, explaining that work product protection is not as easily waived as the attorney-client privilege.

Quoting United States v. Bergonzi, 216 F.R.D. 487 (N.D. Cal. 2003), Settle said work product protection is waived only where disclosure of the otherwise confidential documents to a third party “enables an adversary to gain access to the information'.”

Accordingly, the court said, Ford is not entitled to see any attorney work product Eagle Harbor shared with its manufacturing partners “in anticipation of this litigation or for this litigation.” However, it added, to be protected these materials must contain the impressions, conclusions or theories of counsel.

“A powerpoint presentation reflecting the advice of counsel would most likely be considered work product,” Settle explained. “On the other hand, an email string between business associates … regarding possible patent infringement in anticipation of litigation would require some foundational basis to meet the requirement of impressions, conclusions or theories of counsel.”

Susman Godfrey LLP represented Eagle Harbor. Savitt Bruce & Willey LLP represented Ford.

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