Oxy Resources California LLC v. Superior Court

May parties negotiating a business transaction rely on a “joint defense agreement” as the basis for refusing to produce privileged documents exchanged long before they are actually sued by a third party? Ordinarily, a joint defense agreement protects privileged information shared by defendants after a lawsuit has been filed, including defense strategies. Here, the parties entered into a joint defense agreement before they finalized their negotiations, anticipating they might be sued. They now seek to protect from disclosure communications made during the course of the transaction that gives rise to the lawsuit they anticipated. We conclude in camera inspection of the material must occur before determining whether disclosure is compelled.

At issue are 202 documents reflecting communications between OXY Resources California LLC (OXY) and EOG Resources, Inc. (EOG). OXY and EOG entered into a complex transaction in which they exchanged interests in a number of oil and gas producing properties, including a property subject to a preferential purchase right held by Calpine Natural Gas LP (Calpine). Calpine sued OXY and EOG, contending it was denied the opportunity to exercise…