## Facts

- Teleglobe, a telecommunications company owned by BCE Inc., pursued an expansion strategy that later failed.
- Teleglobe and multiple U.S. subsidiaries filed Chapter 11 bankruptcy in Delaware.
- The debtor subsidiaries brought claims against BCE and certain officers and directors, alleging fiduciary breaches and related wrongdoing.
- During discovery, BCE withheld numerous communications with outside and in-house counsel as protected by attorney–client privilege.
- The debtors argued they were entitled to the withheld materials because (a) BCE and the debtors were co-clients of the same counsel, or (b) they shared a common legal interest that prevented BCE from withholding the documents from them.
- The district court ordered production of most contested materials under a broad view of joint representation and common-interest concepts.
- BCE pursued an interlocutory appeal to prevent compelled disclosure of communications it claimed were privileged as to the debtor subsidiaries.

## Issues

1. Whether an interlocutory order compelling production over an attorney–client privilege claim is appealable under the collateral order doctrine.
2. Under applicable privilege law, when are a parent and subsidiary treated as co-clients of the same counsel in a corporate group.
3. Whether the common-interest doctrine permits one aligned party to obtain another party’s privileged communications in discovery.
4. If co-client status exists, whether the adverse-litigation exception permits discovery of joint-representation communications between former co-clients now in litigation.
5. Whether BCE was barred from asserting privilege or denying joint representation by estoppel or implied waiver theories.

## Decision

- The court held it had appellate jurisdiction under the collateral order doctrine because compelled disclosure of privileged material is effectively unreviewable after final judgment.
- The court concluded Delaware principles could be used to frame the privilege analysis because no relevant conflict in privilege rules was shown.
- The court ruled the district court conflated co-client privilege with the common-interest doctrine and applied an overly broad standard for joint representation within a corporate group.
- The court held the debtors could obtain BCE’s documents only upon a finding of actual joint representation by the same counsel on a matter of common interest (co-client status), not merely because of corporate affiliation or shared interests.
- The court held the common-interest doctrine is an anti-waiver rule for disclosures among separately represented parties and does not itself create reciprocal access rights to all privileged communications.
- The court recognized an adverse-litigation exception: former co-clients may discover communications from the joint representation in subsequent litigation between them, but only if a true co-client relationship existed.
- The court rejected judicial estoppel and implied prospective waiver arguments based on BCE’s statements and conduct.
- The court vacated the production order to the extent it relied on an erroneous privilege framework and remanded for factual findings on whether and to what extent BCE and any debtor entities were co-clients on particular matters.

## Legal Principles

- Collateral order doctrine permits immediate review of an order compelling disclosure of allegedly privileged material because disclosure permanently destroys confidentiality.
- Co-client (joint-client) privilege applies only when multiple clients actually retain or agree to retain the same counsel for a matter of common interest; consent to shared representation is central.
- In litigation between former co-clients, neither may assert the privilege against the other as to communications made during the joint representation (adverse-litigation exception), while the communications remain privileged against outsiders.
- Common-interest (community-of-interest) doctrine is not an independent privilege; it prevents waiver when separately represented parties share privileged information to advance a common legal strategy.
- The common-interest doctrine does not authorize one party to compel production of another party’s privileged communications absent co-client status or another valid basis for disclosure.
- In corporate groups, parent ownership or control and routine intra-group sharing of legal advice do not, by themselves, establish co-client status or transfer control of another entity’s privilege.
- Estoppel or implied waiver requires clear, unequivocal grounds; equivocal statements and corporate oversight are insufficient to forfeit privilege.

## Conclusion

The Third Circuit required a focused, fact-specific inquiry into whether BCE and any debtor subsidiaries were actually co-clients of the same counsel, clarified that common-interest sharing does not create mutual discovery rights, and vacated a broad compelled-production order that treated corporate affiliation and shared interests as sufficient to defeat privilege.


In re Teleglobe Communications Corp., 493 F.3d 345 (3d Cir. 2007)