The common interest rule allows an attorney to share information with other parties involved with or anticipating litigation against a common adversary. Often, these are memorialized as agreements among plaintiffs or defendants to share information against the other. While it is a best practice to reduce these arrangements to writing, it does not always happen. In the past, intrepid adversaries have seized on the lack of a written agreement to make those communications public, arguing that the attorney-client privilege or work product doctrine—which protects attorney communications and assessments of a case—had been waived. The Nevada Supreme Court ruled in Cotter v. Eighth Judicial District Court, though, that the common interest rule applies and protects attorney communication even absent an agreement for confidentiality.
1. Welcome Back Cotter: The Road to the Nevada Supreme Court Recognizing a Widely Applied Doctrine.
Like many other proceedings that have set Nevada law in recent years, Cotter began with the defendant company’s termination of a key employee: its CEO, James Cotter. Cotter sued a number of the directors of his former employer, Reading International, Inc. (“Reading”), in the Eighth Judicial District Court due to his termination. Based on Cotter’s claims against the directors, some of Reading’s shareholders wanted to pursue a shareholder derivative lawsuit against the same directors Cotter was suing, based on similar facts and claims. The Reading shareholders ultimately filed their derivative suit, and the two actions against the directors—Cotter’s direct lawsuit and the shareholders’ derivative action—were consolidated into one case.
During that litigation, Cotter’s attorneys shared information with counsel for the shareholders. Reading’s counsel learned of this, and sought the production of that communication. Both Cotter and the shareholders asserted that the communications constituted attorney work product, which was privileged and protected from disclosure. Both sides failed, however, to memorialize this sharing of information with any kind of confidentiality agreement, such as a joint prosecution agreement. As a result, the district court ordered that the communications be produced.
Rather than produce those communications, and believing that the harm from disclosing such communications could not be rectified on appeal, Cotter filed a petition for a writ of mandamus or prohibition with the Nevada Supreme Court. As has so often been the case in matters of privilege in recent years, the Supreme Court granted the petition and issued a reported decision in deciding its merits.
Sharing attorney-client communication or work product does not necessarily waive the protected and confidential status it would enjoy if it had never been disclosed to a third party. To maintain that information’s confidentiality, though, it must qualify for protection under the common interest rule. While this is a common rule in other jurisdictions throughout the United States, it is one that Nevada had not addressed in depth prior to the Cotter decision.
For the common interest rule to apply, the parties exchanging confidential and privileged information must “anticipate litigation against a common adversary on the same issue or issues” and “have strong common interests in sharing the fruit of the trial preparation efforts.” The rule is not narrowly limited only to co-parties. All that is needed to realize the purpose of the common interest rule “is to protect material from an opposing party in litigation, not necessarily from the rest of the world generally.” Although desirable—and not always practical—a written agreement memorializing this arrangement is not needed. Two or more parties’ common interest “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.”
2. Practical Concerns in Applying the Common Interest Rule.
Because the entire purpose of the common interest rule is to facilitate the sharing of otherwise confidential information, it potentially raises the greatest risk for waiving those privileges. When privileges maintaining the confidentiality of attorney-client communications or attorney work product are waived, the waiver is “usually found when the material is disclosed to an adversary.” In reaching its ruling, the Nevada Supreme Court acknowledged that numerous other jurisdictions have already recognized a broad common interest rule, allowing attorneys to share work product with other counsel for clients with the same interest without waiving the privilege.
“[B]y enlarging the circle of persons to whom the clients may disclose privileged information,” the common interest rule allows the free flow of information between or among litigants, or potential litigants with shared interests, while maintaining the confidentiality of that information. This aids parties in learning about their adversaries and obtaining the information they need to prosecute or defend their cases. Indeed, the most common application of the privilege is when attorneys representing different parties pool their information together.
Although the Nevada Supreme Court recognized the common interest rule’s application even without a written agreement, the amount of discovery and effort needed to prove (or disprove) the plaintiffs’ unity of interest illustrates the desirability of a written agreement. Had the parties in Cotter entered a written agreement, it would have undercut one of the facts the district court apparently relied on quite significantly. Additionally, a written agreement would have clarified the relationship between the parties, or lack thereof.
In situations where one party obtains counsel for another, such as an employer hiring separate counsel for an employee accused of wrongdoing, a written agreement can serve other important purposes, such as memorializing compliance with the Nevada Rules of Professional Conduct, and the party retaining counsel advising the beneficiary to tell the truth—no matter what. While each case and the circumstances of every common interest agreement are different, a written agreement presents the opportunity to memorialize important facts. Important considerations include documenting that the information provided under the agreement is privileged, its use is conditioned on the recipient’s continued cooperation and truthful use of the information, remedies for breach, and the return or destruction of privileged information after the agreement’s term concludes. In many ways, a common interest agreement can be fashioned with provisions similar to a non-disclosure or confidentiality agreement.
Ultimately, the Nevada Supreme Court’s decision in Cotter confirms Nevada law complies with that of other jurisdictions. While the recognition of the common interest rule even without a written agreement is reassuring to attorneys, especially in complex litigation with numerous parties, its reassurance is analogous to the role of a safety net for acrobats. While Cotter will protect privileged information from disclosure where it has been shared with commonly interested parties, it is preferable to not rely upon its holding. Common interest agreements are and have been the norm in multi-party practice; they will continue to be even in the wake of Cotter. The Supreme Court’s decision will provide extra protections to litigants despite any infirmities in their written common interest agreements, but it is no substitute for contractual protection for confidential information.
J. Malcolm (“Jay”) DeVoy is the owner of DeVoy Law P.C. Erica A. Bobak is an associate attorney with the firm, previously the law clerk for Department 30 of the Eighth Judicial District Court. DeVoy Law focuses on providing representation to clients in significant business disputes, serious personal matters, and advising medical professionals and practices about issues including licensure, HIPAA, Stark Law, and the Anti-Kickback Statute.
1. 134 Nev. Adv. Op. 32.
2. Or, commonly, a joint defense agreement between or among numerous defendants represented by separate counsel.
3. United States v. Am. Tel. & Tel. Co. (“AT&T”), 642 F.2d 1285, 1299 (D.C. Cir. 1980).
4. Generally, courts have held that litigants who share a common interest in litigation should be able to communicate with their respective attorneys and with each other to more effectively prosecute or defend their claims. In re Grand Jury Subpoenas, 89-3 & 89-4, John Doe 89-129 (Under Seal), 902 F.2d 244, 249 (4th Cir. 1990).
5. AT&T, 642 F.2d at 1298-99.
6. United States v. Gonzalez, 669 F.3d 974, 979 (9th Cir. 2012)
7. Wynn Resorts, Ltd. v. Eighth Judicial Dist. Ct., 133 Nev. Adv. Op. 52, 399 P.3d 334, 349 (2017).
8. See, e.g., Gonzalez, 669 F.3d at 978; In re Grand Jury Subpoenas, 902 F.2d at 249; Castle v. Sangamo Weston, Inc., 744 F.2d 1464, 1466 (11th Cir. 1984); AT&T, 642 F.2d at 1298-99.
9. Mark L. Tuft and Brandon Lawrence, “What’s Uncommon About the ‘Common Interest’ Doctrine.” https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/38th_conf_session8_whats_uncommon_about_the_common_interest_doctrine.authcheckdam.pdf
10. Niagara Mohawk Power Corp. v. Megan-Racine Assocs. (In re Megan-Racine Assocs.), 189 B.R. 562, 572 (Bankr. N.D.N.Y. 1995).
11. 134 Nev. Adv. Op. 32 at 4.