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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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The famous Garner case permits inspection of otherwise privileged communications when its strict criteria are satisfied. But as this decision decides for the first time in Delaware, Garner does not apply when there is no fiduciary relationship between the party seeking discovery and the party claiming the privilege. Here the LLP agreement waived any fiduciary duties. Thus, Garner did not apply and discovery was denied.
As this decision again points out, a scheduling order is a court order that must be followed or sanctions will be imposed. Late production of documents is just such a sanctionable event.
For some time now, the Court of Chancery has told litigants that objections to documents requests should be specific, not generic and boilerplate. This decision thoroughly addresses the case law on this issue, with numerous citations to federal court precedent and detailed explanations of what objections are proper, including for claims of privilege. Oxbow should serve as a useful resource when it comes time to object to document requests in the Court of Chancery.
Discovery of financial information in M&A litigation, including appraisal actions, often involves two issues: (1) how far back before the transaction should there be discovery and (2) is post-transaction discovery permitted? This decision provides some guidance on both issues.
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.
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.