Durham Industries, Inc. v. North River Insurance Co.

Issue Discussed: Privilege and Work Product / Privilege Logs / Common Interest Doctrine

Submitted by Joseph Monahan*

Date Promulgated: November 21, 1980

Durham Industries, Inc. v. North River Insurance Co., 1980 WL 112701 (S.D.N.Y. Nov. 21, 1980)

Court:  U.S. District Court for the Southern District of New York

Issue Decided: Under what circumstances does the common interest doctrine apply to shield from production otherwise privileged documents previously exchanged between an insurer and its reinsurer?

Key Holding

When the plaintiff insured sought to compel the defendant insurer to produce several documents that would otherwise have been protected by the attorney/client privilege (including correspondence between the insurer and its counsel) but which the insurer had shared with its reinsurer, the court denied the motion. In so doing, the court found there was a common interest between the insurer and reinsurer, which operated as an exception to the general rule that such disclosure to a third party constituted a waiver of the privilege. The court refused, however, to apply the same rule to shield other documents from discovery which were not subject to any privilege, explaining that the common interest doctrine does not create a privilege itself, but only serves to protect from disclosure documents that are otherwise privileged but which are shared with certain third parties.

Key Takeaways

Otherwise privileged documents may be shared with third parties with whom there is a common interest without constituting a waiver of the privilege. In the context of a cedent and its reinsurer, there is such a commonality of interest where the reinsurer bears a percentage of whatever liability might attach to the cedent. However, documents that are not otherwise privileged are not shielded from discovery, notwithstanding the fact that they are shared between parties having a common interest. For instance, documents imparting business information, as opposed to legal advice, are not protected from discovery, even when authored by an attorney.

* Joseph Monahan practices in the Philadelphia office of Saul Ewing LLP, where he is a partner and Vice-Chair of the Insurance Practice Group.  He is an ARIAS member.