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North River Ins. Co. v. Columbia Casualty Co.

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

Submitted by Amy Kline

Date Promulgated: January 5, 1995


North River Ins.
Co. v. Columbia Casualty Co., No. 90 Civ. 2518, 1995 WL 5792 (S.D.N.Y. 1995)

Court: United States District Court for the Southern District of New York

Issue Decided: Can the common interest doctrine be used affirmatively to compel production of a cedent’s privileged documents sought by its reinsurer?

Submitted By: Amy S. Kline[1]

Key Holding              

An reinsurer cannot use the common interest exception to compel a cedent to disclose otherwise privileged information. In a coverage dispute between a reinsurer and ceding company, the reinsurer sought production of documents from the insured related to the prosecution and settlement of the underlying claims. The court rejected the argument that the reinsurer shared a common interest with the ceding company. The court declined to follow International Insurance Co. v. Newmont Mining Corp.[2] which found that there was no common interest because there was no joint representation because the insured and insurer.  Instead, the court found that the common interest doctrine extends to situations where parties are represented by separate legal counsel but are engaged in a “common legal enterprise.”  “More troublesome” to the court, however, was “whether the doctrine can be stretched to apply to communications between entities that have parallel interests but are not actively pursuing a common legal strategy.”  On this question, the court held that as to the cedent-reinsurer relationship, “the interests of the ceding insurer and the reinsurer may be antagonistic in some respects and compatible in others.  Thus, a common interest cannot be assumed merely on the basis of the status of the parties.”  As applied to the instant dispute, the court held that the cedent and reinsurer did not have a common interest in the underlying proceedings.  They were no represented by the same counsel, they did not coordinate litigation strategy, and while their commercial interests coincided their legal interests diverged.[3]

Key Takeaways

While it is not necessary that two parties be represented by the same counsel in order to have a common interest, the cedent-reinsurer relationship alone is insufficient to create a common interest.

 

[1]               Amy Kline is a Vice-Chair of the Litigation Department and a Partner in the Insurance Practice Group of Saul Ewing LLP, resident in Philadelphia, Pennsylvania.

[2]               800 F. Supp. 1195 (S.D.N.Y. 1992).

[3]               The court also rejected the reinsurer’s argument that the documents were discoverable under the fiduciary duty exception to the attorney client privilege on the grounds that no fiduciary relationship existed between the cedent and reinsurer.