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Posted: January 11, 2014

No At Issue Waiver of Privilege When Party Chooses Not to Use Privileged Documents in Litigation

On December 30, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in Old Republic Insurance Co. v. United National Insurance Co., 2013 NY Slip Op. 33423(U), discussing the “at issue” waiver doctrine.

In Old Republic, the defendant moved for “the production of attorney communications” relevant to the oral contract that the plaintiff had alleged existed between it and the defendant. According to the defendant, by alleging the contract, the plaintiff had put all communications regarding it at issue, waiving the attorney-client privilege. The court denied the motion, holding:

“At issue” waiver of privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege would deprive the adversary of vital information. However, that a privileged communication contains information relevant to issues the parties are litigating does not, without more, place the contents of the privileged communication itself “at issue” in the lawsuit; if that were the case, a privilege would have little effect. Generally, no “at issue” waiver is found where the party asserting the privilege does not need the privileged documents to sustain its cause of action. Where reliance is an element of plaintiff’s claim (i.e., claims based on estoppel or fraud), the mere assertion of such a claim does not automatically place privileged communications at issue, regardless of their relevance. . . . .

(Internal quotations and citations omitted). The court went on to discuss the practical implications of the rule:

[The defendant] is not entitled to the privileged communications unless [the plaintiff] seeks to use them, which it does not. [The plaintiff’s] decision not to utilize the subject communications, however, somewhat imperils its case, which rests entirely on its contention . . . that the parties–highly sophisticated insurance companies–orally agreed as to the parameters of the funding to settle an extremely contentious litigation. [T]he plaintiff[] has the burden of proving its prima facie case establishing the material terms of the parties’ oral agreement (for breach of contract) and its position both before and after [the defendant’s] promise (for its estoppel claim). If [the plaintiff] does not, for instance, produce attorney communications prior to [the defendant’s] promise (all the relevant communications involved attorneys), it may not be able to prove what its original position was. Ergo, it cannot prove a change in position. If [the defendant] makes the strategic decision not to produce this evidence, such decision might doom its case. Yet, that is for [the [plaintiff] to decide, not [the defendant].

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