Ambiguous Holding Leaves Common Interest Privilege Law Unstable

In December 2014, in Ambac Assurance v. Countrywide Home Loans, 998 N.Y.S.2d 329 (N.Y. App. Div. 2014), the First Department issued a ruling on the common interest privilege that dramatically departed from previous rulings adopted by other New York courts. Specifically, the First Department dispensed with the requirement that communications be made in reasonable anticipation of litigation (RAL) in order to receive the protection of the common interest privilege. The court’s ruling, however, is subject to at least two interpretations. One reading is that Ambac eliminated the RAL requirement altogether. But a second, equally plausible reading is that the First Department replaced the RAL requirement with a requirement that the proponent of the privilege demonstrate that an important legal interest is advanced by its application.

In this article, we consider briefly the common interest privilege pre- Ambac, analyze the First Department’s decision in Ambac, and discuss the ambiguous nature of the court’s holding. We conclude that the court may have intended to replace, rather than simply eliminate, the RAL requirement in the context of the common interest privilege.

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