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No Counsel, No Common Interest Privilege, Says District Court

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Last week, a district court in the Southern District of California ruled that the common interest privilege protecting confidential communications between a litigant and a third party applies only if each party is represented by counsel at the time of the communication.

The Regents of the University of California (“UC”) filed a complaint against Affymetrix, Inc. (“Affymetrix”) for patent infringement related to fluorescent dyes used as biomarkers. During fact discovery, UC subpoenaed documents from third party AAT, a company Affymetrix “used to design and manufacture the accused dye molecules.” After producing an email sent by an Affymetrix scientist to Affymetrix’s general counsel copying a scientist employed by AAT to UC, AAT attempted to claw back the email. While it was undisputed that disclosing the email to the third-party AAT scientist waived attorney-client privilege, Affymetrix argued that the common interest privilege applied. Importantly, the email did not include counsel for AAT. UC subsequently filed a motion to compel production of the email.

In general, the common interest exception applies when “(1) the communication is made by separate parties in the course of a matter of common interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived.” U.S. v. Bergonzi, 216 F.R.D. 487, 495 (N.D. Cal. 2003).

The Court found that the common interest privilege did not apply because AAT’s scientist was not represented by counsel at the time of the communication. The “common interest” or “joint defense” doctrine is an exception to the general rule that disclosure of protected material to third parties constitutes a waiver. See Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 578 (N.D. Cal. 2007). It is “designed to allow attorneys for different clients pursuing a common legal strategy to communicate with each other.” In re Pac. Pictures Corp., 679 F.3d at 1129 (citing Hunydee v. United States, 355 F.2d 183, 185 (9th Cir. 1965)) (emphasis added). The Court found that the policy behind the common interest privilege “to permit attorneys to develop a joint legal strategy” “requires the participation of lawyers.” The Court rejected Affymetrix’s argument that its in-house counsel represented both AAT’s and Affymetrix’s legal interests in this matter, noting that “attorneys represent clients, not interests.”

What This Means for You

This case underscores the importance of heightened caution when communicating with individuals or entities outside of the company about matters related to current and future litigation or obtaining legal assistance. See Nidec Corp., 249 F.R.D. at 578 (“The protection of the privilege under the community of interest rationale, however, is not limited to joint litigation preparation efforts. It is applicable whenever parties with common interests join forces for the purpose of obtaining more effective legal assistance.”). When sharing confidential and/or privileged information outside the company, you should include counsel for all recipients to avoid an argument that the common interest privilege does not apply. Finally, parties seeking the benefit of the common interest privilege should strongly consider having a common interest agreement. For the common interest exception to apply, there must be “an on-going and joint effort to set up a common defense strategy.” See U.S. ex rel. Burroughs v. DeNardi Corp., 167 F.R.D. 680, 685 (S.D. Cal. 1996). “[A] shared desire to see the same outcome in a legal matter is insufficient to bring a communication between two parties within this exception.” See In re Pac. Pictures Corp., 679 F.3d at 1129. “Instead, the parties must make the communication in pursuit of a joint strategy in accordance with some form of agreement — whether written or unwritten.” See id. An agreement to set up a common defense strategy “may be implied from conduct and situation, such as attorneys exchanging confidential communications from clients who are or potentially may be codefendants or have common interests in litigation.” See United States v. Gonzalez, 669 F.3d 974, 979 (9th Cir. 2012) (quoting Continental Oil Co. v. United States, 330 F.2d 347, 350 (9th Cir. 1964)).

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.