June 28, 2022

Volume XII, Number 179

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June 28, 2022

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June 27, 2022

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NY High Court Rejects Expansion of Common-Interest Doctrine

In 2008, Ambac v. Countrywide defendants Bank of America Corporation and Countrywide Financial Corporation merged into a wholly-owned subsidiary of Bank of America.  In discovery, Bank of America withheld communications between Bank of America and Countrywide that occurred before the merger, on the basis that they were privileged attorney-client communications that were protected from disclosure under the common-interest doctrine. In 2014, the New York Appellate Division, First Department, acknowledged that “New York courts have taken a narrow view of the common-interest [doctrine], holding it applies only with respect to legal advice in pending or reasonably anticipated litigation,” but rejected the litigation requirement.  Ambac v. Countrywide, 123 A.D.3d 129 (1st Dep’t 2014).

Last week, the Court of Appeals overturned the First Department decision and restated the narrower scope of the common-interest doctrine under New York law:

“Under the common interest doctrine, an attorney-client communication that is disclosed to a third party remains privileged if the third party shares a common legal interest with the client who made the communication and the communication is made in furtherance of that common legal interest.  We hold today, as the courts in New York have held for over two decades, that any such communication must also relate to litigation, either pending or anticipated, in order for the exception to apply.”

Ambac v. Countrywide.  The Court of Appeals noted that multiple jurisdictions take a more expansive approach to the doctrine, and commented that the Second Circuit (the federal appellate court with jurisdiction over New York) “ha[s] made clear that actual or ongoing litigation is not required” to invoke the common-interest doctrine, but does “not appear to have expressly decided whether there must be a threat of litigation in order to invoke the exception.”  Ambac v. Countrywide (citing Shaeffler v. United States, 806 F.3d 34 (2d Cir. 2015)).

Takeaways:

  • The scope of protections under the common-interest doctrine varies significantly depending on jurisdiction and governing law.
  • In order to be protected under the common-interest rule under New York law, communications among merger counterparties, including health care entities,  must be made in furtherance of a common legal interest and relate to pending or anticipated litigation.
©2022 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume VI, Number 169
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