Traceback Analysis Protected From Disclosure By The Common Interest Doctrine

In the wake of a foodborne illness outbreak, a traceback investigation is critical to determine the source and distribution path of the contaminated food products.  According to the FDA, a traceback investigation “helps prevent additional illnesses by providing a foundation for recalls of contaminated food remaining in the marketplace and identifying hazardous practices or violations.”  The importance of a traceback analysis is magnified during litigation, where it can be used to prove or disprove liability, provide a basis for comparative/contributory negligence, and possibly limit damages.  The potential impact of a traceback analysis makes it a frequent target of discovery in litigation over a foodborne illness outbreak.  Is a traceback analysis discoverable?  Generally, a food company conducting a traceback investigation will seek to protect the results of its investigation under the work product doctrine.  But is that protection waived if the company shares it investigation with another entity in the chain of distribution?

The New Jersey Federal District Court recently held that under New Jersey state law, a  traceback analysis that one defendant shared with its co-defendant is protected from disclosure under the common interest doctrine.

The plaintiff, McLane Foodservice (“McLane”) filed suit seeking damages after an e-coli outbreak shut down numerous Taco Bell restaurants in New Jersey, New York, and Pennsylvania in 2006.  McLane is a food distribution company that receives and warehouses products from suppliers destined for Taco Bell restaurants.  McLane filed the suit against lettuce suppliers Ready Pac Produce (“Ready Pac”) and Tanimura, alleging that contaminated lettuce was the source of the outbreak.  Ready Pac and Tanimura both denied that lettuce caused the outbreak, yet they maintained cross-claims against each other and blamed each other for the contamination in a separate action pending in California.

In response to the outbreak, Ready Pac’s counsel conducted a traceback analysis to ascertain the source bacteria and determine which parties, if any, were negligent.  Ready Pac and Tanimura later entered into a Common Interest and Confidentiality Agreement to exchange documents, including the traceback analysis.  McLane demanded production of the traceback analysis on the basis that any work-product privilege was waived when Ready Pac shared its analysis with Tanimura.  McLane further argued that the common interest doctrine should not shield the document from discovery because Ready Pac and Tanimura were adverse to each other in this and other pending litigation.

The common interest doctrine is not a recognized privilege, but rather a rule that determines whether work-product protection has been waived by the sharing of a document with third parties.  In many cases, the voluntary disclosure of a document or communication to a third party waives privilege.  However, the common interest doctrine, “enables counsel for clients facing a common litigation opponent to exchange privileged communications and attorney work product in order to adequately prepare a defense without waiving either [work-product or attorney-client] privilege.”  Haines v. Ligget Group Inc., 975 F2d 81, 94 (3d Cir. 1992). The New Jersey state courts employ a three-part test to determine if a document is protected by a common interest:

The common interest exception may be asserted with respect to communications among counsel for different parties if (1) the disclosure is made due to actual or anticipated litigation; (2) for the purposes of furthering a common interest; and (3) the disclosure is made in a manner not inconsistent with maintaining confidentiality against adverse parties.

While determining whether a party has met conditions (1) and (3) is simple enough, the meaning behind “furthering a common interest” in condition (2) has received much scrutiny from the courts.  Summarily, courts have held that all of the parties’ interests need not coincide, so long as they share a joint legal interest with regards to the reason for sharing the document. According to the court in S.E.C. v. Wyly, 2011 WL 2732215 at *1 (S.D.N.Y. July 5 2011), “[m]ost courts have held that the common interest privilege can apply even if the clients are in conflict on some or most points, so long as the communication itself deals with a matter on which the parties have agreed to work toward a mutually beneficial goal.” In the case of Ready Pac and Tanimura, the mutually beneficial goal was to prove that lettuce did not cause the e-coli outbreak.  Therefore the companies’ other adverse positions were not enough to overcome the common interest.  Accordingly, the court ruled that Ready Pac did not have to produce its traceback analysis to McLane.

State laws differ on the application of the common interest privilege, and given courts’ wide discretion in discovery issues, the standard can even differ from judge to judge in the same courthouse.  For instance, many courts are wary of parties misusing the common interest doctrine to protect from disclosure documents shared to further a commercial transaction rather than a common legal strategy, or communications regarding joint business strategy where the concern of litigation is secondary.  Either way, the McLane Foods case highlights the various discovery issues that can arise in connection with a traceback investigation.

* Special thanks to Thomas Coyle for his assistance with this post.

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Posted in Discovery Issues, Traceback Investigation/Analysis

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Cozen O’Connor has a national team of attorneys experienced in handling food contamination and product recall coverage matters related to first-party, third-party and specialty policies. The firm also developed a Food, Beverage & Nutritional Products Industry Team to provide advice and counsel to a wide range of companies connected directly and indirectly to the food and beverage industry.
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