CLIENTS IN CRISIS IN THE MULTIPARTY CONTEXT: THE COMMON INTEREST PRIVILEGE

Transcription

1 PANEL III: FROM THE FRYING PAN INTO THE FIRE: LITIGATING THE BUSINESS CRISIS CLIENTS IN CRISIS IN THE MULTIPARTY CONTEXT: THE COMMON INTEREST PRIVILEGE By Michael L. Knapek Scott A. Wheatley JACKSON WALKER L.L.P. 901 Main Street, Suite 6000 Dallas, Texas YOUR CLIENT IN CRISIS: Strategic Planning, Aftermath Management, and Litigation Scenarios 2002 San Antonio, TX August 1-2, 2002

2 TABLE OF CONTENTS I. INTRODUCTION/ HISTORICAL BACKGROUND... 1 II. SCOPE OF THE COMMON INTEREST PRIVILEGE... 4 A. Parties to the Communication B. A Common Legal Interest: The Degree of Alignment Required... 6 C. Reasonable Expectation of Confidentiality... 8 D. Timing and Context of the Communication Texas Courts: A Pending Action Federal Common Law a. Pending or Anticipated Litigation Required b. Pending or Anticipated Litigation Not Required E. Waiver F. Duration of the Privilege in Subsequent Litigation G. The Privilege as a Basis for Disqualification of Counsel III. THE COMMON INTEREST AGREEMENT AND RECOMMENDATIONS... 21

3 CLIENTS IN CRISIS IN THE MULTIPARTY CONTEXT: THE COMMON INTEREST PRIVILEGE In the complex and intertwined world of business and commerce, corporations represented by separate counsel are increasingly involved in multiparty litigation as coplaintiffs or codefendants facing the same opponent. Similarly, corporations also find themselves aligned with other entities against the same or similar opponent, though in matters pending in separate courts or jurisdictions. To the extent these litigants find it in their interest to cooperate on matters of interest which they hold in common or to pool information for their collective benefit, whether in the same courthouse or in multiple jurisdictions, it is vital for counsel to fully understand the protections, and to some extent, the hazards, afforded by the common-interest privilege. 1 This paper discusses the general parameters of the common-interest privilege with a particular focus on important differences between application of the privilege in Texas and its application in federal and other jurisdictions. I. INTRODUCTION/ HISTORICAL BACKGROUND Parties involved in the same or related litigation often need to communicate with one another or exchange information, whether for the purpose of coordinating joint strategies of defense or prosecution, enhancing the settlement posture of a case, pooling litigation resources and reducing legal fees, or coordinating other legal matters of common interest. The common interest privilege, which is an extension of the attorney-client privilege, 2 protects exchanges of information among parties who share such common legal interests in pending or threatened litigation, and in some cases, non-litigation circumstances, even though the parties are represented by separate counsel. 3 The privilege does not create a new privilege, but serves as an exception to the general rule that the attorney-client privilege or the confidentiality of one s work product is waived when confidential information is disclosed to a third party. 4 1 The common interest privilege is also frequently referred to as the joint defense privilege. In re Grand Jury Subpoenas, 89-3 and 89-4, 902 F.2d 244, 248 (4 th Cir. 1990). Although there may be a technical distinction between common interest privilege and joint defense privilege, at least insofar as the doctrine is applied to coplaintiffs versus codefendants, any such distinction is of little practical effect in most cases. See In re Sealed Case, 29 F.3de 715, 719 (D.C. Cir. 1994) (noting that the appellant had raised both the joint defense privilege and the common interest privilege in the district court). As the privilege has been held to apply to defendants and plaintiffs equally, this paper will refer to the broader privilege as the common interest privilege. See In Re Grand Jury Subpoenas, 902 F.2d at 249 (applying the privilege to plaintiffs as well as defendants) and Texas Rule of Evidence 503(b)(1)(C)(recognizing the privilege as to communications concerning a matter of common interest ). 2 In some cases, the common interest privilege is also said to extend to confidential information protected by the work product doctrine. See Waller v. Financial Corp. of Am., 828 F.2d 579, 583 n. 7 (9 th Cir. 1987). 3 See In Re Grand Jury Subpoenas, 902 F.2d at 249; and Eisenberg v. Gagnon, 766 F.2d 770, (3rd Cir. 1985) ( Communications to an attorney to establish a common defense strategy are privileged even though the attorney represents a client with adverse interests ). 4 See United States v. Schwimmer, 892 F.2d 237, 243 (2 nd Cir. 1989), aff d 924 F.2d 443 (2 nd Cir. 1991); In re Grand Jury Witnesses, 979 F.2d 939, 943 (2 nd Cir. 1992). 1

4 The rationale for the privilege is to encourage cooperation among parties with common legal interests who might be reluctant to exchange information beneficial to their common cause for fear that they might waive their privileges. 5 As such, it is a means of resolving the competing policies of full and fair discovery between adversaries and frank and unfettered communication between a client and his attorney. 6 Nevertheless, because courts across the United States have followed a variety of approaches to determining whether multiple party exchanges are privileged, consistent application of the common interest privilege has not been achieved, leaving its value as a useful litigation tool oftentimes too uncertain. 7 The common interest privilege, historically known as the joint defense privilege, originated in criminal cases where two or more criminal defendants shared the same attorney or shared information among their attorneys for the purpose of preparing a joint defense. 8 The court in Chahoon v. Commonwealth, the first case to recognize the privilege in the United States, summarized the common interest privilege as follows: The parties were jointly indicted for a conspiracy.... They might have employed the same counsel, or they might have employed different counsel as they did. But whether they did the one thing or the other, the effect is the same, as to their right of communication to each and all of the counsel, and as to the privilege of such communication. They had the same defense to make, the act of one in furtherance of the conspiracy, being the act of all, and the counsel of each was in effect the counsel of all.... They had a right, all the accused and their counsel, to consult together about the case and the defense, and it follows as a necessary consequence, that all the information, derived by any of the counsel from such consultation, is privileged Since Chahoon, courts have progressively expanded the privilege, applying it to civil or criminal codefendants with the same or different attorneys, 10 two or more respondents in a grand 5 Indeed, cooperation among separate defendants and their separate counsel in a joint defense effort has been viewed as an integral part of effective legal representation in the criminal defense context. See United States v. McPartlin, 595 F.2d 1321, 1336 (7th Cir.)(noting that communication among joint criminal defendants and their counsel can be necessary to a fair opportunity to defend ), cert denied, 444 U.S. 833 (1979). 6 Cf. Schacher v. American Academy of Ophthalmology, Inc., 106 F.R.D. 187, 189 (N.D. Ill. 1985) ( federal policies support free and fair discovery ) with Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (purpose of attorney-client privilege is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice. ). 7 As the Supreme Court noted in Upjohn Co., the seminal case on the attorney client privilege, [a]n uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all., 449 U.S. 383, 393 (1981). 8 See Strong v. State, 773 S.W.2d 543, 547, (Tex. Crim. App. 1989). 9 Chahoon v. Commonwealth, 62 Va. (21 Gratt.) 1026 (1871). Two early English cases even recognized the privilege for joint conference in non-litigation situations. See Rochefoucauld v. Boustead, 65 L.J.R. 794, 796 (Ch. 1896) and Enthoven v. Cobb, 42 Eng. Rep. 1019, (Ch. 1852). 10 See Aiken v. Texas Farm Bureau Mut. Ins. Co., 151 F.R.D. 621, 624 (E.D. Tex. 1993); In re Grand Jury Subpoenas, 902 F.2d 244, 248 (4 th Cir. 1990), United States v. Schwimmer, 892 F.2d 237, 243 (2 nd Cir. 1989). 2

5 jury investigation, 11 coplaintiffs in a civil suit, 12 prospective clients in a joint consultation, 13 potential parties, 14 non-parties to litigation, 15 and to confidential work product and tangible objects. 16 As a result of this progressive expansion, the privilege evolved from being termed one of joint defense to its broader denomination as the common interest privilege. 17 As the common interest privilege gained wider acceptance and recognition, the Supreme Court attempted to achieve greater uniformity by including it in its 1971 proposed codification of the federal common law of privileges in the proposed Federal Rules of Evidence for the United States Courts and Magistrates ( Proposed Federal Rules ). 18 Proposed Federal Rule 503(b)(3), which addresses the common interest privilege, provides that: A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client,... (3) by him or his lawyer to a lawyer representing another in a matter of common interest. 19 Congress, however, was not satisfied that the Proposed Federal Rules adequately restated the federal common law of privileges, noting that they contained controversial modifications or restrictions upon common law privileges. 20 Instead, Congress enacted a single, general rule of privilege, leaving the federal common interest privilege to evolve as common law. Federal Rule of Evidence 501 provides in relevant part: [T]he privilege of a witness, person, government, State or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States.... However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies 11 In re LTV Securities. Litig., 89 F.R.D. 595, 604 (N.D. Tex. 1981). 12 Schachar, 106 F.R.D. 187, 193 (N.D. Ill. 1985). 13 In re Auclair, 961 F.2d 65, 70 (5 th Cir. 1992). 14 In re LTV Securities Litig., 89 F.R.D. at 604; Leybhold-Heraeus Technologies, Inc. v. Midwest Instrument Co., 118 F.R.D. 609, 613 (E.D. Wis. 1987). 15 In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4 th Cir. 1990). 16 United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980); Western Fuels Ass n, Inc. v. Burlington N.R.R., 102 F.R.D. 201, 203 (D. Wyo. 1984); Haines v. Liggett Group, Inc., 975 F.2d 81, 90 (3 rd Cir. 1992). 17 Indeed, in cases with coplaintiffs, it has even been referred to as the joint prosecution privilege. See Schachar, 106 F.R.D. at See Fed. R. Evid , 51 F.R.D. 315, (1971) (revised proposed draft) (b), 51 F.R.D. at See SENATE COMM. ON THE JUDICIARY, FEDERAL RULES OF EVIDENCE, S. Rep. No. 1277, 93 rd Cong., 2 nd Sess. 11, reprinted in 1974 U.S. Code Cong. & Admin. News 7051, Even though the Proposed Federal Rules ultimately were not adopted, they are still considered to be persuasive as a quasi-restatement of the federal common law of privileges, at least in the absence of any actual federal codification of the same. See Strong, 773 S.W.2d 543, 549 (Tex. Crim. App. 1989). 3

6 the rule of decision, the privilege... shall be determined in accordance with State law. 21 Thus, under Federal Rule of Evidence 501, the ability of a party to claim the common interest privilege will depend on the law of the particular state which supplies the decisional law. 22 On the other hand, federal common law on privileges typically will typically apply in cases involving questions of federal law. 23 Texas has adopted a modified version of Proposed Federal Rule 503(b)(3), expressly recognizing the common interest privilege as part of the attorney client privilege. 24 Texas Rule of Evidence 503(b)(1)(C) provides: A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client... (C) by the client or a representative of the client, or the client s lawyer or a representative of the lawyer, to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein In a significant departure from the privilege as envisioned in the Proposed Federal Rule, the Texas Rule narrowly restricts the protection of communications to those made in a pending action and which specifically concern a matter of common interest. 26 II. SCOPE OF THE COMMON INTEREST PRIVILEGE Because the common interest privilege in Texas is an extension of the attorney-client privilege, as opposed to being a separate or independent privilege, parties seeking to invoke this privilege have the burden to establish that the subject communications or information exchanged falls within that privilege. 27 Generally, communications are subject to the attorney-client privilege that are (1) confidential, (2) between or among an attorney, his or her client, and/or their representatives, (3) for the purpose of seeking, obtaining, or facilitating the rendition of legal advice, and (4) the privilege has been asserted and not waived. 28 The common interest denied) FED. R. EVID Rio Hondo Implement Co. v. Euresti, 903 S.W.2d 128, 131 (Tex. Ct. App. Corpus Christi 1995, writ Tex. R. Evid 503 (b)(1)(c). See also Strong v. State, 773 S.W.2d 543, 548 n. 8 (Tex. Crim. App. 1989) (noting that unlike the proposed Federal rule [503], which required that the communication relate to a matter of common interest, Texas rule [503(b)(1)(C)], requires in addition that the communication concern a pending action with the other party. ). 27 See Ryals v. Canales, 767 S.W.2d 226, 229 (Tex. Civ. App. Dallas 1989, no writ). 28 See 8 J. WIGMORE, EVIDENCE 2292, at 554 (J. McNaughton rev. ed. 1961). 4

7 privilege in Texas may be distinguished from the attorney-client privilege primarily by the additional requirements that there be a pending action and that the communications be made concerning a matter of common interest. 29 However, and perhaps in a manner more consistent with the traditional attorney-client privilege, the federal common law of privileges protects communications between a client and a coparty s attorney so long as they are part of an ongoing effort to set up a joint defense or prosecution strategy in the context of actual or threatened litigation. 30 Thus, it may be said that the basic elements for establishing the common interest privilege are as follows: (1) communications made or information exchanged, (2) in furtherance of a common legal interest, (3) in pending or threatened litigation, (4) the communications or exchange of information are designed to further that joint effort, (5) the person making the statement has a reasonable expectation of confidentiality, and (6) the privilege has not been waived. 31 It goes without saying, however, that because courts differ as to the extent to which the common interest privilege applies, attorneys advising clients in a multiparty context should determine which body of law will determine the applicable evidentiary privileges prior to drafting a common interest agreement or entering into a common interest arrangement. A. Parties to the Communication. The most common use of the common interest privilege occurs when attorneys representing clients exchange information to be used in the joint defense or prosecution of an action. 32 The privilege also encompasses statements made by a party directly to the lawyer for another party with common interests. 33 The privilege has even been held to apply to statements from nonparties to a plaintiff s lawyer. 34 The common interest privilege does not apply, however, to communications between the client of one lawyer and the client of another lawyer. 35 Client-to-client communication clearly does not fit within any logical extension of the attorney-client privilege and the requirement that there be an expectation of confidentiality. 29 Tex. R. Evid. 503(b)(1)(C). 30 Cf. LTV Securities Litig., 89 F.R.D. 595, 604 (N.D. Tex. 1981) (applying the common interest privilege to anticipated litigation) with Schwimmer, 892 F.2d 237, (2 nd Cir. 1989) ( The need to protect the free flow of information from client to attorney logically exists whenever multiple clients share a common interest about a legal matter... and it is therefore unnecessary that there be actual litigation in progress for the common interest rule of the attorney-client privilege to apply ). 31 See United States v. American Tel. & Tel. Co., 642 F.2d 1285, (D.C. Cir. 1980). 32 See United States v. Zolin, 809 F.2d 1411, 1417 (9 th Cir. 1987) ( The paradigm case is where two or more persons subject to possible indictment arising from the same transaction make confidential statements that are exchanged among their attorneys. ), aff d in part and vacated in part, 109 S.Ct (1989); and Continental Oil Co. v. United States, 330 F.2d 347, 350 (9 th Cir. 1964) (holding that the common interest privilege covered the exchange of memoranda among counsel). 33 See McPartlin, 595 F.2d 1321, (7 th Cir. 1979) (statements made by codefendant to an investigator for defendant s counsel); and Eisenberg v. Gagnon, 766 F.2d 770, (3 rd Cir. 1985) (correspondence between the principal of a defendant-firm in a securities fraud action and the attorney for another defendant). 34 Stanley Works v. Haeger Potteries, Inc., 35 F.R.D. 551, 555 (N.D. Ill. 1964) ( Little, Inc. although not an official party to this law suit, is in substance equally concerned with the outcome, and its communications with plaintiff s attorney need only be identified, but not produced. ) 35 See, e.g., Tex. R. Evid

8 Texas Rule of Evidence 503(b)(1)(C) clearly states that the common interest privilege in Texas is limited to communications among lawyers or between clients and attorneys (or their representatives). 36 Similarly, Proposed Federal Rule 503(b)(3) extended only to communications by a party or his lawyer to a lawyer representing another in a matter of common interest, impliedly excluding such client-to-client exchanges. 37 B. A Common Legal Interest: The Degree of Alignment Required. One of the most important aspects of the common interest privilege is the degree of alignment required among the parties claiming the privilege. This aspect is unique to the common interest privilege and has no counterpart in the attorney-client privilege. While some courts refuse to find the privilege where the interests of coparties are not exactly identical on all issues, or where they are even potentially adverse or have divergent interests, more courts seem willing to find the privilege where the communication is made or information exchanged for a common purpose of the parties, even in light of possible conflicts of interest. 38 Even though a primary purpose of the common interest privilege is to promote the common interests of the coparties, Texas courts recognize that the positions of the parties need not be compatible in all respects for the privilege to apply. 39 For example, the court in Strong broadly held that the privilege protects sharing information for any defensive purpose common to the participating defendants. 40 So long as communications are made for a common purpose related to both defenses, that is, for the benefit of both parties, the privilege should apply, regardless of any potential adversity. 41 In Strong, the Texas Court of Criminal Appeals considered whether two codefendants were sufficiently adverse to one another to deny application of the common interest privilege under Texas Rule of Evidence 503(b)(3). 42 Defendant Strong had written a letter to his codefendant s attorney which tended to exonerate the codefendant of liability. 43 When Strong sought to exclude the letter at trial, the court found no common purpose in doing so, noting 36 Tex. R. Evid. 503(b)(1)(C). 37 Fed. R. Evid. 503(b)(3), 51 F.R.D. at 362 (1971) (revised proposed draft). 38 United States v. McPartlin, 595 F.2d 1321, 1336 (7 th Cir. 1979). 39 See Strong v. State, 773 S.W.2d 543, (Tex. Crim. App. 1989) Strong, 773 S.W.2d at 552. As the court noted in Strong, the Advisory Committee s note to Proposed Federal Rule 503(b)(3) ambiguously suggests that the positions of the parties need not be compatible in all respects for a privilege based on a common interest to apply: The third type of communication occurs in the joint defense or pooled information situation, where different lawyers represent clients who have some interests in common.... The rule does not apply to situations where there is no common interest to be promoted by a joint consultation, and the parties meet on a purely adversary basis. Committee on Rules of Practice and Procedure of the Judicial Conference of the United States, Rule 503(b)(3), 51 F.R.D. 315, (1971) (emphasis added) (quoted in Strong, 773 S.W.2d at 549). 43 Strong, 773 S.W.2d at

9 that the codefendant had nothing to gain by asserting the privilege as to the letter. 44 While Strong alone benefited from its exclusion, the letter tended to corroborate his codefendant s story. 45 Unfortunately, not all Texas decisions have adhered to the bright-line common purpose rule. In Gulf Oil Corp. v. Fuller, 46 the Texas Court of Appeals applied a balancing of interests test modeled to some extent on the landmark opinion in Duplan Corp. v. Deering Milliken, Inc., 47 an early case which considered the degree of alignment required to find a common interest privilege. Pursuant to the rule in Duplan, [t]he key consideration [in determining whether common interest privilege applies] is that the nature of the interest be identical, not similar, and be legal, not solely commercial. 48 The court in Gulf Oil Corp. found an overlap of both commercial and legal interest among participants in a technical committee that was formed by certain codefendants in a natural gas interest royalty suit. 49 Furthermore, the court noted that the relationship between the codefendants was more adversary than cooperative, and [that] the mutuality [fell] more in the area of commercial impact than legal. 50 In denying the privilege as to the technical committee s work product and communications, the court noted the numerous cross-actions and adversary postures among codefendants, holding that [i]n the overall context of the suit, the adversary relationship between the working interest owners is far more significant than the joint defense against the Plaintiffs. 51 Significantly, the Gulf Oil court never considered whether the communications among members of the technical committee were made for a common purpose or for the benefit of all of its members related to the defenses of the coparties. 52 Other federal courts, however, follow the common purpose rule as the Texas court adopted in Strong, 53 recognizing that potential adversity between the parties does not preclude the parties from making confidential communications in the furtherance of a joint defense. In United States v. McPartlin, the defendant was entitled to the protection of the common interest privilege because he made his statements, which tended to exculpate his co-defendant, in confidence to an investigator for the co-defendant s attorney. 54 The statements in McPartlin were made in connection with a plan to discredit a witness, a project in which the two defendants and their attorneys were engaged for the benefit of both defendants. 55 Because the statements Gulf Oil Corp. v. Fuller, 695 S.W.2d 769, 774 (Tex. Civ. App. El Paso 1985, no writ). Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1172 (D.S.C. 1974). Gulf Oil Corp., 695 S.W.2d at 774 (citing Duplan). 773 S.W.2d 543 (Tex. Crim. App. 1989). McPartlin, 595 F.2d 1321, 1336 (7 th Cir. 1979). 7

10 were made in confidence for a common purpose related to both defenses, they were privileged. 56 Similarly, the court in Government of Virgin Islands v. Joseph denied the privilege to a defendant who made a communication that did not serve a common purpose related to the defenses of both defendants. 57 In that case, charges of assault, robbery and rape were brought against Joseph and Motta. 58 Prior to the indictment, Motta s attorney met with Joseph and obtained a confession signed by him exculpating Motta. 59 The court held that Joseph could not rely on the common purpose theory to exclude the confession because Motta s interests were at all times completely antagonistic to the interests of Joseph [and].... the purpose of Joseph s statements was to help his friend and co-defendant Motta. 60 C. Reasonable Expectation of Confidentiality. Only communications made or information exchanged with a reasonable expectation of confidentiality can be privileged. 61 In addressing whether a given communication was meant to be confidential and therefore subject to the privilege, what the client reasonably understood is the key question. 62 The presence of parties not within the common interest arrangement and/or parties with potentially adverse interests can destroy confidentiality. 63 In United States. v. Bay State Ambulance & Hosp. Rental Service, Inc., the defendants were convicted for conspiring to commit Medicare fraud. 64 On appeal, the court considered whether an outline of projects prepared by co-defendant Felci listing all the time he spent as a consultant on Bay State matters was improperly admitted against Felci in violation of the common interest privilege. 65 Upon Bay State s request, Felci had voluntarily provided the list to Bay State, which Bay State then turned over to the FBI. 66 Indeed, Felci did so without even consulting his own attorney and failed to provide his attorney with the same information until months later. 67 The court found it difficult to see how the information could have been given as 56 See also Hunydee v. United States, 355 F.2d 183 (9 th Cir. 1965); and Grand Jury Subpoena Duces Tecum Dated November 16, 1974, 406 F. Supp. 381, 388 (S.D.N.Y. 1975) (privilege covers communications to a prospective or actual codefendant s attorney when these communications are engendered solely in the interest of a joint defense effort. ). 57 Government of Virgin Islands v. Joseph, 685 F.2d 857, 862 (3 rd Cir. 1982) United States v. Bay State Ambulance & Hosp. Rental Service, Inc., 874 F.2d 20, 28 (1 st Cir. 1989). 62 (citing Kevlik v. Goldstein, 724 F2d 844, 849 (1 st Cir. 1984)(emphasis original)). 63 United States v. Melvin, 650 F.2d 641, 646 (5 th Cir. 1981) (holding that there is no confidentiality for purposes of the common interest privilege when disclosures are made in the presence of a person who has not joined the defense team). 64 Bay State, 874 F.2d at

11 part of a joint defense or common interest as Felci could not reasonably have understood that the list he delivered to Bay State would have been kept confidential. 68 In United States v. Lopez one criminal defendant, Jaramillo, made certain exculpatory statements regarding his criminal co-defendant, Lopez, in the presence of Jaramillo s lawyer, Kwako. 69 Lopez lawyer, Norvell, was not present at the meeting where the alleged exculpatory statements were made. 70 The court considered whether Jaramillo s lawyer, Kwako, should have been permitted to testify regarding Jaramillo s alleged exculpatory statements, or whether Jaramillo s statements were subject to the common interest privilege. 71 The court found that the statements were not privileged on the grounds that Jaramillo had no reasonable expectation of confidentiality when he made the statements. 72 Even though Jaramillo made the statements to his own lawyer, he made them in the presence of his co-defendant, Lopez. 73 Furthermore, Lopez maintained potentially adverse interests to those of Jaramillo and had already retained his own lawyer, even though his lawyer was not present, suggesting that Jaramillo reasonably could not have expected his statements to be maintained in confidence. 74 D. Timing and Context of the Communication. The timing and context of the subject communication or exchange of information is one of the most important factors in determining whether the common interest privilege exists, because, depending on the jurisdiction, actual or potential litigation is usually a prerequisite. 75 Indeed, in Texas, the privilege may only be available when the communication is made during a pending action. 76 The requirement that litigation be pending or anticipated is a marked deviation from the privilege s roots in the attorney-client privilege, which applies to communications between an attorney and his client regardless of whether litigation has begun or is even contemplated. Even so, some courts have construed the common interest privilege broadly to protect even communications made or information exchanged merely to promote a common interest, even though litigation is neither pending nor anticipated. 77 Prior to joining a common interest arrangement with other parties, it is crucial that counsel understand whether the evidentiary rules applicable to a client s situation liberally draw the privilege to protect 68 at 29 ( When a person provides information to another without first consulting his own attorney, it is difficult to see how the information was given as party of a joint defense, even when the recipient may be viewed as a party with similar interests.... Although Felci might have subjectively thought otherwise, the key question is what was objectively reasonable under the circumstances. ) 69 Lopez, 777 F.2d 543, 552 (10 th Cir. 1985) at Ryals v. Canales, 767 S.W.2d 226, 228 (Tex. Civ. App. Dallas 1989, no writ); Polycast Technology Corp. v. Uniroyal, Inc., 125 F.R.D. 47, 50 (S.D.N.Y. 1989). 76 See Tex. R. Evid. 503(b)(1)(C). 77 See Zolin, 809 F.2d at 1417 ( Even where the non-party who is privy to the attorney-client communications has never been sued on the matter of common interest and faces no immediate liability, it can still be found to have a common interest with the party seeking to protect the communications. ). 9

12 communications absent even a threat of litigation, or whether actual litigation is required. Absent a clear understanding of this aspect of the privilege with concomitant planning, a client risks waiving his right to assert the common interest privilege altogether. 1. Texas Courts: A Pending Action. Texas Rule of Evidence 503(b)(1)(C) clearly states that the common interest privilege extends to communications among parties and their lawyers or representatives in a pending action As adopted, this rule constricts the privilege as stated in the Proposed Federal Rule 503, which would protect information exchanged outside the context of an ongoing lawsuit. 79 The unpublished case of The Betas (Ill.) Realty Group, Ltd. et al, v. Tandy Corporation, et al. 80 demonstrates how courts applying Texas Rule 503 will deny the common interest privilege as to communications made prior to the institution of suit. 81 In that case, the plaintiff sought production of documents exchanged between codefendants Tandy and Tandycrafts going back as far as February 1996 with regard to the matter which gave rise to the lawsuit, even though actual suit was not filed until March 12, The court denied common interest privilege protection to the documents, holding that Tandy failed to demonstrate that its communications with Tandycrafts and Tandycrafts counsel before March 12, 1998 were made in the context of pending litigation. Although Tandy Corporation and Tandycrafts may have acted in cooperation before March 1998 because it was in their mutual commercial interest to do so, that alone does not establish the existence of confidential communications which are protected by the privilege. 83 In Ryals v. Canales, the Texas Court of Appeals considered the Texas requirement that there be a pending action in order for the common interest privilege to apply. 84 In the original action, McRoberts sued Ryals and Mazda for injuries arising from an automobile accident Tex. R. Evid. 503(b)(1)(C). 79 Proposed Federal Rule 503(b) extended the common interest privilege to communications made for the purpose of facilitating the rendition of professional legal services to the client... by him or his lawyer to a lawyer representing another in a matter of common interest. Fed. R. Evid. 503(b), 51 F.R.D. 315, (1971) (revised proposed draft). 80 The Betas (Ill.) Realty Group, Ltd. et al., v. Tandy Corporation, et al., Civil Action No. 4:99-CV-051-Y, In the United States District Court for the Northern District of Texas, Fort Worth Div. 81 Recall that Federal Rule of Evidence 501 requires federal courts sitting in diversity to apply state law on privileges when the state provides the decisional law. Fed. R. Evid Furthermore, it should be noted that there is no Texas Supreme Court decision interpreting Texas Rule of Evidence 503(b)(1)(C). 82 Tandy Corporation, Civil Action No. 4:99-CV-051-Y, In the United States District Court for the Northern District of Texas, Fort Worth Div. 83, Order on Motion for Clarification, January 20, 2000, U.S. Magistrate Judge Charles Bleil, at 2, attached hereto at Appendix A. 84 Ryals v. Canales, 767 S.W.2d 226, (Tex. Civ. App. Dallas 1989, no writ). 85 at

13 Following a settlement between McRoberts and Ryals which was reduced to judgment, McRoberts filed with the trial court a petition for bill of review seeking to set aside the judgment confirming that settlement. 86 Mazda filed a plea in intervention in the bill of review proceeding, claiming that it had standing because, if the petition were granted, the resulting new trial would cause delay in trial of the severed action by McRoberts against Mazda. 87 After the court struck Mazda s plea in intervention, Ryals filed a third-party complaint against Mazda in the bill of review proceeding, claiming that Mazda was responsible for any harm to McRoberts. 88 The issue in Ryals was whether communications between Ryals and Mazda prior to and following Mazda s filing of its plea in intervention were privileged from discovery by McRoberts under the common interest privilege as coparties to a pending action. 89 The court held that Mazda was aligned with Ryals as a party before the court following Mazda s filing of its plea in intervention until it was stricken by the court. 90 Similarly, during the period that Ryals third party complaint was on file against Mazda, the court held that Mazda was properly a party to a pending action. 91 In a noteworthy manner, the court also held that, during the period preceding Mazda s intervention and the period between the striking of Mazda s plea in intervention and the filing of the third-party complaint by Ryals, regardless of whether Mazda was properly a party in the bill of review proceeding, it was in fact a party Thus, the court essentially deemed Mazda to be a party for purposes of the privilege in light of Mazda s attempted intervention, as any communications between the two took place in anticipation of Mazda s imminent entry into the proceedings. 93 The court in Boston Auction Co. v. Western Farm Credit Bank 94 similarly held that Hawaii Rule of Evidence 503(b)(3), which is virtually identical to the Rule enacted in Texas, at at Curiously, while discussing the common interest privilege the Ryals court recited Texas Rule 503 then stated that [p]arties may assert the privilege when they are: (1) parties in the same lawsuit, [citation omitted]; (2) parties who are about to be in the same lawsuit, making their communications in anticipation of litigation, [citation omitted]; or (3) parties with common defenses against a plaintiff [citation omitted].... (emphasis added). Nevertheless, given the court s focus on pending action in its analysis of the facts and its clear citation to the Texas Rule of Evidence requirement that there be a pending action, it is likely that such language is dicta Boston Auction Company, Ltd. v. Western Farm Credit Bank, 925 F. Supp. 1478, (D. Haw. 1996). Hawaii Rule of Evidence 503(b)(3) provides that: [a] client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client... (3) by the client or the client s representative or the lawyer or a representative of the lawyer to a lawyer or a representative or a lawyer representing another party in a pending action and concerning a matter of common interest.... Haw. R. Evid 503(b) (emphasis added). 11

14 extends the common interest privilege only to communications made in connection with a pending action, but not to those made in anticipation of litigation. 96 Boston Auction was a breach of contract action by plaintiff, Boston Auction Co., against defendant WFCB, a bank, seeking a commission on one or more unsuccessful attempted sales of land owned by HSC to RC as part of an overall effort to restructure and pay off a loan from WFCB to HSC. 97 Subsequent to the failed land sale by HSC to RC, RC threatened to sue HSC and WFCB for damages and to place a lis pendens on the property. 98 Under this significant threat to their common interest, WFCB and HSC cooperated to settle the dispute with RC without RC ever filing a lawsuit. 99 Boston Auction then sought discovery of communications between WFCB and HSC in connection with its suit to recover its commission. 100 The Boston Auction court held that the communications between WFCB and HSC were not subject to the common interest privilege, reasoning that the plain and obvious meaning of pending action did not encompass prelitigation settlement communications between potential codefendants who were never a party to an ongoing lawsuit, even when threatened with litigation Federal Common Law. a. Pending or Anticipated Litigation Required. Many federal courts considering the timing and context of the communication for which protection is sought hold that as long as the parties to the communication anticipate litigation, the common interest privilege will apply. 102 Some courts even hold that there must be a palpable threat or a strong possibility of litigation 103 Under this construction of the privilege, the party asserting the privilege has the burden to establish (a) that there was either existing litigation or a strong possibility of future litigation, and (b) that the communications were provided for the purpose of mounting a common defense. 104 The Fifth Circuit applies the rule extending the common interest privilege to either pending or anticipated litigation. 105 In Santa Fe, the court held that a memorandum sent by the defendant to its competitors that sought to avoid conduct that might lead to future litigation was not privileged. 106 In sending the subject memorandum, the defendant was not seeking to prepare 96 Boston Auction, 925 F. Supp. at (citing Ryals v. Canales, 767 S.W.2d 226, 229 (Tex. Civ. App. Dallas 1989, no writ)). 97 Boston Auction, 925 F. Supp. at at at See Matter of Grand Jury Subpoena Duces Tecum Dated November 16, 1974, 406 F. Supp. 381, 389 (S.D.N.Y. 1975); and LTV Securities Lit., 89 F.R.D. 595, 604 (N.D. Tex. 1981). 103 See Medcom Holding Co. v. Baxter Travenol Lab., 689 F. Supp. 841, 844 (N.D. Ill. 1988)( The timing of the communications is important; there must be a strong possibility of litigation. ). 104 Metro Wastewater Reclamation Dist. v. Continental Casualty Co., 142 F.R.D. 471, 478 (D. Colo. 1992). 105 In re Santa Fe Int l Corp., No , 2001 WL (5 th Cir. Nov. 7, 2001). 106, 2001 WL , at *4. 12

15 for future litigation, but merely attempting to avoid it. 107 In recognizing the privilege in the context of potential litigation, the court nevertheless held that it must be narrowly construed: there must be a palpable threat of litigation at the time of the communication, rather than a mere awareness that one s questionable conduct might someday result in litigation, before communications between one possible future co-defendant and another... could qualify for protection. 108 Thus, though federal courts applying federal common law principles do not require that there be a pending action in order to extend the common interest privilege to joint communications or exchanges of information, they nonetheless require something more than just mere awareness that litigation might some day result. To meet this federal standard, a palpable threat or a strong possibility of future litigation is necessary. In Polycast Technology Corp. v. Uniroyal, the court held that communications between the vice president of Plastics, a subsidiary of Uniroyal, and the general counsel for Uniroyal, were not privileged insofar as they pertained to the negotiations and sale of Plastics to Polycast. 109 Because the communications concerned contractual obligations under the stock purchase agreement to which Plastics and Uniroyal were parties, but did not concern actual or potential litigation, the limitation of legal liability, or the development of a common defense, the court held that the communications were not made in anticipation of litigation. 110 Thus, the privilege did not apply. 111 b. Pending or Anticipated Litigation Not Required. Although many federal courts, including the Fifth Circuit, follow the rule that there must be a palpable threat or strong possibility of future litigation in order to qualify for the privilege, other federal courts have followed the approach of the federal Proposed Federal Rule 503, 112 holding that as long as parties are sharing information relevant to a common interest, the communications are privileged even if the parties are not, and do not anticipate being, coparties. 113 This group of decisions reflects a greater willingness to permit parties to engage in Polycast Technology Corp. v. Uniroyal, Inc., et al., 125 F.R.D. 47, 51 (S.D.N.Y. 1989) See also Bass Public Ltd. Co. v. Promus Cos. Inc., 868 F. Supp. 615, 621 (S.D.N.Y. 1994) (holding that communications between a parent corporation and its subsidiary regarding sale of the subsidiary to a purchaser were not privileged, since the parent and subsidiary were never co-defendants in [the] action and there [was] no evidence that any of the parties anticipated that they would become co-defendants in subsequent litigation. ). 112 Recall that Proposed Federal Rule 503(b)(3) requires only that communications be made for the purpose of facilitating the rendition of professional legal services to the client... in a matter of common interest. See Fed. R. Evid , 51 F.R.D. 315, (1971) (revised proposed draft). 113 See, e.g., SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 514 (D. Conn. 1976); and Schwimmer, 892 F.2d 237, (2 nd Cir. 1989) ( The need to protect the free flow of information from client to attorney logically exists whenever multiple clients share a common interest about a legal matter... and it is therefore unnecessary that there be actual litigation in progress for the common interest rule of the attorney-client privilege to apply. ). 13

16 a cooperative effort to meet threats that implicate their interests, even when litigation is not imminent or even a strong possibility. 114 Although the shared interest necessary to justify the extension of the common interest privilege exists most frequently among common parties to existing or anticipated lawsuits, it is not limited to that situation. Indeed, the requirement that clients be coparties to actual or anticipated litigation to be entitled to the common interest privilege seems inconsistent with the idea that the common interest privilege is an extension of the attorney client privilege. In Continental Oil Co. v. United States, the court held that memoranda exchanged between attorneys were protected even though the grand jury had not yet handed down indictments. 115 Although in that case the parties anticipated being indicted, the court stressed that the privilege applies irrespective of litigation begun or contemplated. 116 The court applied this rule to communications among defendants and interested nonparties in United States v. Zolin, holding such communications to be privileged. 117 In that case, the court held that the privilege was not waived as to communications at a meeting among the church, its attorney, and certain nonparties sharing the defendant church s interests. 118 Concluding that such communications were privileged, the court stated that even where the non-party who is privy to the attorney-client communications has never been sued on the matter of common interest and faces no immediate liability, it can still be found to have a common interest with the party seeking to protect the communications. 119 Similarly, the court in United States v. United Technologies Corp., 120 did not limit application of the privilege to situations of pending or anticipated litigation. 121 In that case, the IRS brought an action to enforce a summons issued as part of an investigation of defendant s tax liability for The IRS sought documents relating to communications between a consortium of companies (including defendant) and counsel pertaining to the consortium s strategy to minimize its tax liability with regard to selling small commercial jet engines in the U.S. 123 The court found that the common interest privilege protected from disclosure all but one of the disputed documents, even in the absence of actual or anticipated litigation. 124 The court held that the common interest privilege applied because (1) the documents pertained to the consortium s development of a common legal strategy regarding its tax structure; (2) the consortium members acted as collaborators, legally committed to a cooperative venture, and sought to make that venture maximally profitable; (3) the attorneys for each of the consortium members advised the other members and coordinated their legal efforts; and (4) the documents Continental Oil Co. v. United States, 330 F.2d 347, 350 (9 th Cir. 1964). (quoting 8 J. WIGMORE, EVIDENCE 2294, at 558 (J. McNaughton rev. ed. 1961). United States v. Zolin 809 F.2d 1411, 1417 (9 th Cir. 1987). United States v. United Technologies Corp., 979 F. Supp. 108 (D. Conn. 1997). at 110. at

17 were disclosed only to persons who shared responsibility for the subject matter underlying the consultation. 125 Additionally, courts have also applied this expansive reading of the rule to parties with common interests in the joint exploitation of patents. 126 The court in SCM Corp. v. Xerox Corp. 127 held that communications among attorneys and representatives for defendant Xerox and non-party companies with which it shared a common interest in the exploitation of certain patents were subject to the common interest privilege. 128 Likewise, the court in Stanley Works v. Haeger Potteries, Inc. held that communications exchanged between Stanley and Little, Inc., parties in a joint licensing program for the exploitation of a patent, were subject to the common interest privilege, even though Little was not a formal party to the suit and did not anticipate becoming a party. 129 In finding the communications privileged, the court noted that Little, Inc., although not an official party to this law suit, is in substance equally concerned with the outcome To the extent these and other cases gain wider acceptance among federal courts, the common interest privilege may truly begin to resemble the attorney-client privilege to the extent that communications are privileged regardless of whether litigation is pending or anticipated. E. Waiver. Parties with a common legal interest who are involved together in litigation understandably may have concerns about disclosure of confidential information to parties over whom they have no real control. Fears often are expressed by those contemplating entering into such efforts that disclosure to third parties might result in waiver or loss of privilege as to information protected by the attorney-client privilege. It is important for counsel to understand that the common interest privilege may be waived, just as any other privilege may be waived. For example, a party to the communications may waive the privilege by disclosing the confidential information to persons outside the scope of the common interest relationship. 131 Also, communications made in the presence of parties not participating in the common interest effort will waive any privilege that might have existed but for the presence of the non-participating party. 132 One protection afforded to parties to a common interest arrangement is that waiver of the common interest privilege requires the consent of all and may not rest on the actions of a single party. 133 Even the consent of the majority where several parties share the privilege will not Cf. cases applying the privilege to the joint exploitation of patents, infra notes , to the rule announced in Duplan, supra note 47, that the common interest be legal and not commercial. 127 SCM Corp. v. Xerox Corp., 70 F.R.D. 508 (D. Conn. 1976). 128 at Stanley Works, 35 F.R.D. 551, 554 (N.D. Ill. 1964). 130 at Western Fuels, 102 F.R.D. 201, 203 (D. Wyo. 1984). 132 See Lopez, 777 F.2d at Western Fuels, 102 F.R.D. at

18 suffice to waiver the privilege. 134 The rationale for this limitation is to assure joint defense efforts are not inhibited or even precluded by the fear that a party to joint defense communications may subsequently unilaterally waive the privileges of all participants, either purposefully in an effort to exonerate himself, or inadvertently. 135 It is important to note, however, that this limitation does not extend to situations in which litigation ensues between the cooperating parties. 136 In that situation, each party can use previous confidential information against the other. 137 With respect to corporations, it should be noted that any privilege, whether attorneyclient or work product, that exists as to a corporate officer s role and duties within the corporation belongs to the corporation, not the officer, and therefore may only be waived by the corporation. 138 Additionally, when corporation undergo a change of control, such as through a merger or acquisition, the authority to assert and waive the corporation s privileges passes with the corporation being sold or otherwise undergoing a change in control. 139 As might be expected, the rules affecting corporations and their privileges been applied in the context of the common interest privilege. 140 F. Duration of the Privilege in Subsequent Litigation. If two parties to a common interest relationship assume an adversarial position in subsequent litigation, either holder of the common interest privilege can waive the privilege unilaterally through voluntarily disclosing the privileged information to a third party. 141 This exception to the privilege is embodied in Texas Rule of Evidence 503(d)(5), which allows joint communications into evidence in an action between or among any of the clients. 142 Of central importance in determining the effectiveness of the attempted unilateral waiver is the degree of adversity in the subsequent litigation between or among those who share the privilege. The standard for determining adversity under Texas Rule of Evidence 503(d)(5) is that a lawsuit be filed. 143 This rule comports with the court s decision in Grand Jury Subpoenas that the privilege was waived in an action brought by or against a successor-in-interest to a former joint client where any one of the other former joint clients stands as an opposing party in such action. 144 Similarly, the court in Ohio-Sealy Mattress Mnfg. Co. v. Kaplan 145 held that parties 134 In re Megan-Racine Assocs., Inc., 192 B.R. 321, 324 (Bankr. N.D.N.Y. 1995) ( [A] consequence of the privilege is that the participants can preclude each other from unilaterally waiving it. ) In re Grand Jury Subpoena, 406 F. Supp. 381, 394 (S.D.N.Y. 1975) Commodity Futures Trading Comm n v. Weintraub, 471 U.S. 343, 348 (1985). 139 at Medcom Holding Co. v. Baxter Travenol Laboratories 689 F. Supp. 841, 844 (N.D. Ill. 1988). 141 In re Grand Jury Subpoena, 406 F. Supp. at Tex. R. Evid. 503(d)(5) In re Grand Jury Subpoenas, 406 F. Supp. at Ohio-Sealy Mattress Mnfg. Co. v. Kaplan, 90 F.R.D. 21 (N.D. Ill. 1980). 16

19 became adverse for purposes of unilateral waiver of the privilege when Michigan-Sealy filed suit against Ohio-Sealy. 146 Even though holders of the common interest privilege may unilaterally waive the privilege given the requisite adversity, such adversity between the parties does not affect the ability of either party to invoke the privilege as against the rest of the world. 147 In other words, in suits brought by third parties against one or more of the common interest parties, the common interest privilege cannot be waived unless all of the common interest parties consent. 148 In the case of In re LTV Securities Litigation, a plaintiff shareholder class sued the corporation, LTV, and its auditors, E&W, alleging fraud through a series of accounting manipulations. 149 The plaintiffs sought discovery of communications between LTV and E&W after the SEC served subpoenas upon them. 150 The plaintiffs argued that communications between LTV and E&W after the issuance of SEC subpoenas were served should have been denied privilege because of the potential adversity between the parties. 151 The court found little merit in plaintiffs contentions, holding that even should allies such as LTV and E&W later become estranged, they would still be entitled to invoke the common interest privilege to protect shared confidences from disclosure to a third party. 152 The results can be interesting in the context of a merger or acquisition of the company holding the privilege. In Medcom Holding Co. v. Baxter Travenol Laboratories, Baxter negotiated the sale of its wholly-owned subsidiary, Medcom, Inc., to Medcom Holding, with Baxter s in-house counsel representing both parent and subsidiary. 153 Post-sale disputes between Medcom Holding and Baxter grew into a lawsuit, and Medcom Holding sought to compel production of documents related to attorney-client communications between officers of Medcom, Inc. (Baxter s former subsidiary) and Baxter s in-house counsel. 154 The court found that a common interest privilege attached to the communications between Baxter and Medcom, Inc. 155 Nevertheless, the court held that Medcom, Inc. retained the power to waive the privilege even after it had been sold to Medcom Holding Co. 156 However, the court held that Medcom Holding, the new parent to Medcom, Inc., was a third party as related to the former common interest 146 at In re Grand Jury Subpoena, 406 F. Supp. at 386 ( To be sure, what is divulged by and to the clients present at such a meeting cannot be deemed to be confidential inter sese; in any later controversy between or among those clients, the privilege could not stand as a bar to full disclosure at the instance of any one of them.... Nonetheless, in the absence of such event and in relation to the rest of the world, the attorney-client communications issuing from such a joint conference are invested with absolute secrecy. ) In re LTV Securities Litigation, 89 F.R.D. at See also Leybold-Heraeus Technologies, Inc., 118 F.R.D. 609, 613 (E.D. Wis. 1987). 153 Medcom Holding Co. v. Baxter Travenol Laboratories, 689 F. Supp. 841, 842 (N.D. Ill. 1988) at 844. It should be noted that the joint-client privilege is distinct from the joint-defense or common interest privilege, as the joint-client privilege applies to the situation where two clients are represented by the same attorney in the same matter

20 relationship between Baxter and Medcom, Inc, and therefore could not access the privileged information. 157 Because Medcom Holding s claims were not derivative of the rights of Medcom, Inc., it was not a successor-in-interest to Medcom, Inc. s privilege with respect to common interest material. 158 Similarly, Medcom, Inc. was not permitted to unilaterally waive its privilege in favor of Medcom Holding, as it was Medcom Holding that brought the action against Baxter, not Medcom, Inc. Indeed, because Medcom, Inc. was not even a party to the lawsuit, it was not an adversary of Baxter. 159 G. The Privilege as a Basis for Disqualification of Counsel. The common interest privilege can provide the basis for disqualifying opposing counsel in subsequent litigation against a former member of the common interest arrangement. 160 The basis for doing so is generally founded in the rule that an attorney may not proceed against a former client in a matter that is substantially related to the former representation. 161 It differs in the circumstance of a common interest arrangement, however, for the other common interest party is actually not a former client at all, but merely a commonly aligned party. Nevertheless, to the extent common interest counsel agree to preserve confidences disclosed as part of the common interest arrangement, at least as against third parties, courts have held that a conflict of interest arises when the attorney subsequently agrees to represent third parties against the former member of the common interest arrangement that may require disqualification of counsel. 162 In National Medical Enterprises, Inc. v. Godbey, the Texas Supreme Court disqualified the law firm of Baker Botts from representing a class of plaintiffs against a former member of a common interest arrangement, NME, in a matter which was substantially related to the prior investigations and lawsuits involving NME. 163 The related matters involved accusations that NME mistreated psychiatric patients and defrauded their insurers, public and private, to obtain payment for treatment without medical justification. 164 Tomko, a Baker Botts attorney, had represented and advised Cronen, a former regional hospital administrator for NME, in connection with criminal investigations into NME s activities and discovery in various related civil lawsuits. 165 While Cronen was named a defendant in at least thirty-three civil lawsuits, in each case the claims against him were dismissed. 166 Significantly, Tomko s representation of Cronen was subject to a joint defense agreement with NME Medcom, 689 F. Supp. 841, 845 (N.D. Ill. 1988) at 844. Cf. Polycast, 125 F.R.D. 47, 50 (S.D.N.Y. 1989) (Plaintiff acquired right to waive joint-client privilege of subsidiary it acquired from defendant). 160 National Medical Enterprises, Inc. v. Godbey, 924 S.W.2d 123 (Tex. 1996). 161 Wilson P. Abraham Constr. Co. v. Armco Steel Corp., 559 F.2d 250, 252 (5 th Cir. 1977). 162 Godbey, 924 S.W.2d at at at 125. That agreement provided in relevant part: 18