“Logical extension of Waste Management Common-Interest exception” to privilege waiver

An Illinois appellate court, applying Illinois law, held that co-defendants in a case who agree to share information pursuant to their common interest in defeating their litigation opponent do not waive either their attorney-client or work-product privilege.

A purported class action lawsuit was filed against State Farm Mutual Auto Insurance Company (“State Farm”) and its attorney, James M. O’Dea, claiming that a series of subrogation lawsuits were part of a large scale scheme to obtain fraudulent default judgments against subrogation defendants by circumventing state service requirements.  The class action asserted claims against State Farm for abuse of process, civil conspiracy, and malicious prosecution.  State Farm objected to the disclosure requested by certain interrogatories which sought information about communications it had with O’Dea after the filing of the class action lawsuit.  In addition to relying on the attorney-client and work-product privileges, State Farm also asserted a “joint legal defense privilege,” arguing that State Farm and O’Dea had executed a joint defense agreement and anything the co-defendants and their respective lawyers said to one another after the filing of the lawsuit, about the lawsuit, was privileged as a part of communications concerning a common or joint defense.

The circuit court decided that Illinois should recognize the “joint legal defense” doctrine and ruled that, to the extent that the plaintiffs sought post-complaint communications between State Farm and O’Dea in their interrogatory, that information was privileged from discovery.  The circuit court found that a privilege log for documents withheld pursuant to the “joint legal defense” was not required and that there was no reason to look further into the content or context of the communications at issue.

On appeal, State Farm argued that the Illinois Supreme Court in Waste Management Inc. v. International Surplus Lines Ins.  Co., 144 Ill. 2d 178, 193 (1991) already recognized the “joint defense” doctrine as the common-interest doctrine.  The Illinois appellate court disagreed that the Waste Management doctrine was applicable to the case at hand, but did find that a common-interest exception to the waiver rule was a “logical extension of the Waste Management common-interest doctrine.”  The appellate court affirmed the circuit court’s decision to adopt the doctrine, which it described as not a new privilege, but rather as a common-interest exception to the waiver rule that normally invalidates the attorney-client or work-product privileges.

According to the appellate court, the common-interest exception to the waiver rule protects from disclosure to third parties “those statements made to further the parties’ common interest, pursuant to a common interest agreement, (1) by the attorney for one party to the other party’s attorney; (2) by one party to the other party’s attorney; (3) by one party to its own attorney, if in the presence of the other party’s lawyer; and (4)from one party to another, with counsel present.”  The appellate court also found that State Farm was required to provide a privilege log identifying each communication it objected to on the basis of the common-interest exception and that an in camera, communication-by-communication analysis should be performed by the trial court to determine the applicability of the exception.  The appellate court did not decide whether the doctrine extends beyond actual litigation to the threat of litigation, whether the doctrine protects communications directly from one party to the other party in common interest or whether a written agreement is required before the exception would apply, because those were not issues before the court. Selby v. O’Dea, 2017 IL App (1st) 151572 (Dec. 7, 2017).