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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Morris James Blogs
Kops v. The Bank of New York Mellon Corporation, C.A. 10102-VCG (Transcript, July 16, 2015)
This recently released transcript has a good explanation of how to apply the Garner/Wal-Mart principles governing when stockholders may get discovery of documents otherwise subject to the attorney-client privilege. The multiple facts involved, particularly in a Section 220 case, tend to permit such discovery when the issue is whether demand is excused to file a derivative suit. More ›
This an excellent review of the scope of a waiver of the attorney client privilege and it harmonizes conflicting prior decisions. It also is a good outline of what must be in a redaction log.
What discovery is permitted in a books and records case has two dimensions. More ›
Some countries, particularly in Europe, have laws that restrict the ability to get discovery of email and other materials. This careful decision explains when the Court of Chancery will order that discovery anyway. The opinion reviews the United States Supreme Court decisions and the laws of France on this subject.
Delays in discovery that affect the trial date will get a litigant in trouble with the Court. The Delaware Supreme Court has made this clear and required that scheduling orders be followed. This transcript makes this clear.
The term "inadvertent" is frequently used in confidentiality and quick-peek agreements to permit the claw back of privileged documents that have been "inadvertently" produced. In a rare case, the Court of Chancery concluded that there was inadvertent production, even though the documents were used in questioning a witness.
This is a useful decision because it collects the relevant rules for deciding if there is a privilege for communications that include a mixture of business and legal advice. If the business advice can be segregated from the legal advice, the communication should be produced with the legal advice redacted. If the business advice predominates and segregating it from the legal advice is not possible, the communication should be produced. But if the business advice cannot be said to predominate and segregating the legal advice is not possible, the communication may be withheld.
In what seems to have created a real stir, the Court of Chancery held that control over the assertion of the attorney-client privilege passed to the acquiring corporation in a merger. Hence, that entity could waive that privilege and obtain the legal advice the company received before the merger about certain aspects of its operations that the buyer now is arguing over. Frankly, there is a lot of authority supporting this result and it should not have come as a surprise.
As is well known, the attorney/client privilege may be waived by interjecting that communication into the matters "at issue" in the litigation. Advice of counsel as a defense is one such instance. This decision illustrates another - when the advice apparently went to the valuation matters.
Also interesting is the Court's caution that just because one side interjects attorney communications into the issues, that does not mean that the opposing side's demand to see those communications also opens up its privileged matters to discovery as well.
If it is upheld upon review, this decision by a Master in Chancery needs to be studied by all practitioners. Briefly, it holds that when a party waives the attorney-client privilege, it does so with respect to the entire subject matter of the communication involved in the waiver. There is no temporal limit such that later communications on the same subject matter may be protected from discovery.
This decision holds that an employee's email communications with his attorneys are not privileged. The holding is limited to circumstances where the employer has at least told the employees not to expect that their email is private. Furthermore, the Court notes that this decision may not be followed in the typical derivative case where an outsider is trying to gain access to those emails. That decision will need to wait for another day.
Almost every case seems to involve the issue of when asserting that the defendant board had legal advice constitutes a waiver of the attorney-client privilege. This decision explains how far you can go and yet preserve the privilege. Basically, you can say that you consulted and still keep the privilege, but you cannot say 'he told me it was okay" without a waiver.
This transcript decision illustrates the danger in using a computer generated privilege log. It will leave out document descriptions, addresses, etc. As a result, the Court here held that any privilege claim was waived by using the "worst" log ever. Hence, loggers beware!
This decision discusses when discovery from a third party not involved in the transaction under attack in the litigation is justified. In part, the Court denied the discovery because it was not convinced the information to be obtained would be all that helpful in the litigation.
When does the mere assertion that your client had "advice of counsel" waive the attorney-client privilege? This question comes up more often than you might think. This decision makes clear that in some instances, merely asserting that you sought an attorney's advice is not a waiver of the privilege. The 2 keys to retaining the privilege are not injecting the advice of counsel issue into the litigation yourself and not actually saying what the attorney told you. But, if you follow the guidance in this decision, the privilege will be preserved.