Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
June 13 — A divided New York Court of Appeals June 9 declined to broaden the attorney-client privilege shield in a decision finding that hundreds of documents related to Bank of America's 2008 acquisition of Countrywide Financial Corp. were discoverable ( Ambac Assurance Corp. v. Countrywide Home Loans Inc., 2016 BL 184648, N.Y., No. 80, 6/9/16 ).
The case involved communications between the bank and Countrywide before the merger was completed. The materials were sought by Ambac Assurance Corp., which alleged that Countrywide fraudulently induced it to insure mortgage-backed securities before Countrywide was acquired by Bank of America.
The state high court 4-2 reversed a lower court decision finding that the communications were protected by New York's “common interest” doctrine (12 CARE 1690, 12/12/14).
Writing for the majority, Judge Eugene Pigott Jr. said that policy reasons didn't support expanding the common interest doctrine to include protecting communications made in the absence of pending or anticipated litigation.
Under the doctrine, communications between counsel and a client that are made in the presence of or subsequently disclosed to a third party are protected under the attorney-client privilege when the third party shares a legal interest with the client.
The court's ruling means that certain communications made in the context of mergers and other types of complex transactions will still be discoverable in lawsuits.
“Put simply, when businesses share a common interest in closing a complex transaction, their shared interest in the transaction's completion is already an adequate incentive for exchanging information necessary to achieve that end,” Pigott wrote.
In her dissent, Judge Jenny Rivera said the doctrine should be extended. She observed that other state and federal courts that have addressed this issue have held the privilege applies even if litigation isn't pending or reasonably anticipated.
“[T]he privilege should apply to private client-attorney communications exchanged during the course of a transformative business enterprise, in which the parties commit to collaboration and exchange of client information to obtain legal advice aimed at compliance with transaction-related statutory and regulatory mandates,” she wrote.
Chief Judge Janet DiFiore didn't participate in the case.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
The opinion is available at http://src.bna.com/fQM.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)