Fireman’s Fund Insurance Co. v. Great American Insurance Co. of New York
Issue Discussed: Privilege and Work Product / Privilege Logs / Common Interest Doctrine
Submitted by Joseph Monahan*
Date Promulgated: July 3, 2012
Fireman’s Fund Insurance Co. v. Great American Insurance Co. of New York, 284 F.R.D. 132 (S.D.N.Y. Feb. 4, 2010)
Court: U.S. District Court for the Southern District of New York
Issue Decided: Are documents reflecting communications between cedent and its reinsurer subject to discovery, or does the common interest doctrine operate to shield the same?
In a coverage dispute, an insurer can be compelled to produce documents regarding its reinsurance and communications with its reinsurer, and the common interest doctrine does not automatically operate as a shield to prevent such discovery. Noting Second Circuit precedent, the court held that reinsurance information is discoverable, provided its relevance is established. In this case, the court found that the information in the reinsurer’s files regarding the nature of the reinsured risk was relevant to potentially rebut the insurer’s claim that the insured had fraudulently concealed the condition and value of the risk at issue (a dry dock). Likewise, the court found that information in the reinsurer’s files regarding reserves was relevant and thus subject to discovery. The common interest doctrine does not automatically apply to the relationship between cedent and reinsurer, but only where the two have an identical shared legal interest. The court declined to make the categorical finding that all reinsurers and cedents share a per se common interest.
A party seeking to establish applicability of the common interest doctrine must make a two-part showing. First, the parties exchanging the otherwise privileged information must establish a common legal, rather than commercial, interest. Their interest must be identical, and not merely similar. While the parties must have come to some agreement reflecting a “cooperative and common enterprise towards an identical legal strategy”, that agreement need not be in writing. Second, any exchange of documents between the parties must have been done in furtherance of that shared strategy and with their mutual understanding of the same.
* 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.