Delaware Business Litigation Report

Chancery Declines to Order Production of Privileged Document

Drachman v. BioDelivery Sciences International, Inc., C.A. No. 2019-0728-LWW (Del. Ch. Aug. 25, 2021)
Drachman addresses the attorney-client privilege, certain exceptions thereto, including the Garner doctrine, and waiver. Plaintiffs moved to compel the production of a redacted document over which defendants asserted privilege. The document in question was part of an email thread, or group of related communications, that included the advice of counsel and was produced across multiple documents with inconsistent redactions. One version of the communication “slipped through the cracks,” and was produced without redactions before being clawed back by the defendants under the confidentiality order entered in the case.

Plaintiffs argued, among other things, that the Garner doctrine, or fiduciary exception, required the document’s production in unredacted form. The Court of Chancery disagreed and denied the plaintiffs’ motion. The Garner doctrine is a narrow exception in the fiduciary context under which shareholders may overcome privilege based upon a showing of good cause. The Garner doctrine includes nine non-exhaustive factors for consideration. Delaware places the greatest emphasis on three factors: 1) colorability of underlying claim; 2) specific identification of the communication; and 3) whether the information is available to shareholders from other sources.

In considering the motions, the court agreed that the claim was colorable and that the document was specifically and exactly identified, but found that the exception was not warranted because the current posture of discovery prevented meaningful analysis as to whether the information was available elsewhere. The Vice Chancellor wrote that it appeared from the record that plaintiffs were attempting to “short-circuit the discovery process” by invoking Garner. By the time of their first motion, plaintiffs had not taken a single deposition and had only served one set of interrogatories. According to the court, it would be inequitable to “invade that privilege at the outset of discovery” when plaintiffs had made no attempt to determine whether the information was available from any other source. Plaintiffs’ other arguments in favor of production—i.e., the crime-fraud exception and the at-issue exception—met a similar fate, with the court deeming them inapplicable on the facts.

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