In In re Village at Lakeridge, LLC, BAP Nos. 12-1456, 12-1474 (B.A.P. 9th Cir. Apr. 5, 2013), the Bankruptcy Appellate Panel of the Ninth Circuit clarified that, in order to apply the common interest doctrine, a trial court must make a finding that the parties expressly or implicitly agreed to participate in a joint legal strategy. In this case, secured creditor, US Bank, deposed the sole unsecured creditor, Rabkin. Just prior to his deposition, Rabkin, his counsel, and the debtor’s counsel met for an hour. During the deposition, asserting the common interest doctrine, Rabkin refused to answer questions about the substance of the meeting. The bankruptcy court found that Rabkin and the debtor had a common legal interest in obtaining confirmation of the reorganization plan, and denied US Bank’s motion to compel. The appellate court reversed. Applying In re Pacific Pictures Corp., 679 F.3d 1121 (9th Cir. 2012), the court held that in order to invoke the common interest doctrine, a party must demonstrate not only that there is a common legal interest, but also that the parties had an express or implied agreement to pursue a joint legal strategy: “the parties must make the communication in pursuit of a joint strategy in accordance with some form of agreement – whether written or unwritten.”
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9th Circuit: finding of common strategy needed for common interest doctrine
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