Drafting Joint Defense Agreements: Protecting

the Privilege, Sharing Work Product, Avoiding

Disqualification

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TUESDAY, MARCH 3, 2020

Presenting a live 90-minute webinar with interactive Q&A

Ronald J. Levine, General Counsel, Herrick Feinstein, Newark, N.J.

Patrick F. Linehan, Partner, Steptoe & Johnson, Washington, D.C.

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Ronald J. Levine, Esq.

Herr ick , Fe inste in LLPN e w Yo r k / N e w a r k , N . J .

( 2 1 2 ) 5 9 2 - 1 4 2 4

r l e v i n e @ h e r r i c k . c o m

w w w. h e r r i c k . c o m

Joint Defense

Strategies

The Big Picture

Joint Defense Privilege applies to

communications that are part of an ongoing and

joint effort to establish a common defense

Allows for communications without waiving

attorney-client privilege:

-Remember the 5 C’s

Not an independent privilege

May not protect direct party-

to-party communications

6

Benefits

Allows industry to present aggressive, united

defense

Consistency of defense positions

Uniform discovery and motion strategy

Coordination of knowledge and resources

Facilitates information sharing about judges,

venues, plaintiffs' lawyers, etc.

Alert system for "copy cat" cases

Reduce costs and streamline

resources

7

When?

• Active or threatened litigation (with exceptions)

• Share a common litigation-related interest

• Objective agreement among the parties

• Is the agreement in the best interests of your

client?

…What if things fall apart or break down?

8

How?

Explain necessity

Confirm conflict checks

Provisions on when waiver and termination can

occur

Address settlements

9

Practical Considerations

Coordination of motion practice– will competitors

agree on when, and before whom, motions should

be brought?

Coordination of settlement – will competitors share

information and their settlement strategies?

Coordination of information – will competitors

share data and experts?

Need not cooperate during entire litigation – can

be limited phases or issues

Can set up subgroups where not all parties are

similarly situated10

Lessons Learned From Coordinating

With Other Companies

Need leadership to organize calls and prepare

agenda – note leadership can be expensive

Need participants “in the know” about recent

developments

Need to run internal screens at your firm

Need to be able to screen participants

Need to be able to preserve security

Need to involve outside counsel to

share information among parties

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Suggestions For Coordination

Expert Witness Bank

Deposition and Trial Transcript Bank

Designated “Gurus” who track settlements and

court decisions

Exchange of Pleadings and Motion Papers

12

Caution! Companies may not be on the same page

Competitors may be seeking a competitive

advantage

Friend today can become enemy tomorrow

Outside counsel can change sides

One of the companies may settle (or may have

settled) and leave your company high and dry

13

Joint Defense

Agreements

Patrick F. Linehan

202-429-8154

PLinehan@steptoe.com

www.steptoe.com

Joint Defense/Common Interest Agreements

▪ Recurring Questions Regarding Joint

Defense/Common Interest Agreements

– Enforceability

– Discoverability

– Application Outside of Litigation Context

▪ Joint Defense Agreements in the Criminal context

– Generally

– Impact of Yates Memo

▪ Ethical Considerations

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The Enforceability of Joint Defense/Common

Interest Agreements

Recent Caselaw

▪ Importance of Commonality

– United States v. Gonzalez, 669 F.3d 974 (9th Cir. 2012)

▪ Business Interests vs. Legal Interests

– FSP Stallion 1, LLC v. Luce, 2010 WL 3895914 (D. Nev. Sept. 30, 2010)

– Heartland Consumer Prod. LLC v. DineEquity, Inc., 2018 WL 3574737 (S.D.

Ind. July 25, 2018)

▪ Use of Written Agreements

– Wells Fargo Bank, N.A. v. LaSalle Bank Nat’l Ass’n, 2010 WL 2594828 (W.D.

Okla. June 22, 2010)

– SEC v. Rashid, 17-cv-8223 (PKC) (S.D.N.Y. Dec. 13, 2018)

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The Discoverability of Joint

Defense/Common Interest Agreements

Are JDAs themselves privileged?

Usually Not…

– Pac. Coast Steel v. Leany 2011 WL 4572008 (D. Nev. Sept.

30, 2011)

– Rodriguez v. Gen. Dynamics Armament & Technological

Prods., Inc. 2010 WL 1438908 (D. Haw. Apr. 7, 2010)

…Except Where Agreement May Contain Sensitive

Information

– Steuben Foods, Inc. v. GEA Process Eng’g, Inc., 2016 WL

1238785 (W.D.N.Y. Mar. 30, 2016)

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Does the common interest doctrine

apply in the absence of pending or

anticipated litigation?

▪ Recent Caselaw

– Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 N.Y.3d 616, 57 N.E.3d 30

(2016)

– Schaeffler v. United States, 806 F.3d 34 (2d Cir. 2015)

– O’Boyle v. Borough of Longport, 94 A.3d 299 (2014)

▪ The Delaware Rule: D.R.E. 502(b)(3)

▪ What Can Deal Parties Do Regarding Potential Privilege Waiver?

– Document basis for assertion of common interest

– Use of written agreement

– Hire new counsel for joint advice on joint issue

– Limit information sharing to non-privileged communications pre-closing

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Joint Defense Agreements in Criminal CasesThe DOJ’s Official Policy on JDAs Has Changed Over Time

▪ Under the Holder Memo (1999), a company’s decision to form a JDA was to be considered by the government when deciding whether to bring charges against the company itself.

▪ Justice Manual § 9-28.700: “Similarly, the mere participation by a corporation in a joint defense agreement does not render the corporation ineligible to receive cooperation credit, and prosecutors may not request that a corporation refrain from entering into such agreements. Of course, the corporation may wish to avoid putting itself in the position of being disabled, by virtue of a particular joint defense or similar agreement, from providing some relevant facts to the government and thereby limiting its ability to seek such cooperation credit.”

▪ Until September 2015, the DOJ awarded cooperation credit to corporations on a spectrum based on the corporation’s degree of cooperation.

▪ Under new guidelines, issued in a memo by then-Deputy Attorney General Sally Yates, the DOJ will no longer give any cooperation credit to corporations seeking leniency unless they divulge all facts about individual employee misconduct.

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Joint Defense Agreements After the Yates Memo

▪ Companies must now balance the benefits of JDAs against the

potential loss of cooperation credit if the government decides a

company has not sufficiently implicated individual employee

wrongdoers.

▪ The Yates Memo may chill the entering into and the sharing of

facts pursuant to JDAs by leaving JDAs vulnerable to attack

based on arguments that the parties lack a “common interest.”

– Handicaps company’s ability to conduct thorough internal

investigation

– Handicaps individual’s ability to defend itself in government

investigation

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Practice Pointers

▪ A written agreement setting forth the specific grounds for finding

commonality of interests and the terms of post-withdrawal

sharing of information may be preferable.

▪ When client is a company:

– Seek feedback from government on its view of whether particular

individuals have common interests with company and whether it is

concerned about a JDA’s application in the civil litigation context.

– When retaining separate representation for current employees,

company counsel should consider the potential impact on the joint

defense privilege.

▪ When client is an individual:

– Exercise care in what information it shares with company counsel

and the manner in which that information is shared.

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Ethical Considerations▪ Creation of Attorney-Client Relationship

– United States v. Henke, 222 F.3d 633 (9th Cir. 2000)

– City of Kalamazoo v. Mich. Disposal Serv. Corp., 125 F. Supp. 2d 219 (W.D. Mich. 2000)

– Takeda Pharmaceutical Company Limited, et al. v. Zydus Pharmaceuticals (USA), Inc., et al., Case No. 18-1994 (FLW) (D.N.J. Dec. 18, 2018)

– ABA Opinion 95-395

▪ Risk of Disqualification– Wilson P. Abraham Constr. Corp. v. Armco Steel Corp., 559 F. 2d 250, 253 (5th Cir.

1977)

– Diva Limousine Ltd. v. Uber Technologies Inc., No. 18-cv-05546-EMC, 2019 BL 8013 (N.D. Cal. Jan. 9, 2019)

– D.C. Bar Opinion 349

▪ Advance Waivers of Potential Conflicts – All Am. Semiconductor, Inc. v. Hynix Semiconductor, Inc., 2008 WL 5484552 (N.D. Cal.

2008)

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Practical Advice To Avoid Ethical Pitfalls

▪ Always include language in JDA that disclaims creation of attorney-client privilege and all rights to seek disqualification of attorneys in joint defense group

▪ Include specific waivers in JDA:

– Cross-examination and possible impeachment of any defecting JD member

– Seeking disqualifications based on lawyers’ moves to new firms

– Express permission of other lawyers representing clients in matters adverse to other joint defense members

▪ Have lawyers sign JDA in individual capacity, not on behalf of firm

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