Comverge, Inc., Shareholders Litigation, C.A. No. 7368-VCP (Del. Ch.
April 10, 2013) [an enhanced version of this opinion is available to lexis.com
Whether the attorney-client privilege was a defense to a motion to compel
Yes, under the circumstances of this case.
Summary of Analysis
The court observed that under Court of Chancery Rule 26(b)(1), the "parties may
obtain discovery regarding any matter, not privileged, which is relevant
to the subject matter involved in the pending action . . .. A party asserting a
privilege has the burden of proof to show that the privilege is applicable to
the communication." See footnote 3. Rule 502 of the Delaware Rules
of Evidence codifies the lawyer-client privilege and the five elements of that
Communication is confidential if it is not
"intended to be disclosed to third persons other than those to whom disclosure
is made in furtherance of the rendition of professional legal services to the
client or those reasonably necessary for the transmission of the
communication." See footnote 5. The lawyer-client privilege as
described in DRE 502 is not absolute and can be restricted or denied entirely
when a party places an otherwise privileged communication "at issue" in the
litigation. See footnote 7.
This "at issue exception" to the lawyer-client privilege
is based on waiver and fairness to prevent a party from using it at both an
offensive and defensive weapon.
A party places the lawyer-client communication "at issue"
and waives the lawyer-client privilege when:
(1) a party injects the privileged communications
themselves into the litigation, or (2) a party injects an issue into the
litigation, the truthful resolution of which requires an examination of
confidential communications. See footnote 9.
The court reasoned that the examination of privileged
communications was not required for the truthful resolution of this litigation
because the defendants merely seek to rely on the fact that they sought and
obtained legal advice - - rather than arguing that they relied on the substance
of the privileged communications to prove that the board was fully informed.
Therefore, the court explained that the defendants:
"did not inequitably use attorney-client privilege as a sword or inject a
privilege-laden issue into the litigation." See footnote 21 and
The court referred to cases where the defense was that
legal counsel was obtained and that the existence of legal advice was
material to the question of whether the board acted with due care, but the
substance of that advice was not inquired into. See, e.g., Hollinger
International, Inc. v. Black, 844 A.2d 1022 (Del. Ch. 2004) [enhanced version], aff'd, 872 A.2d 559 (Del.
2005) (referring to the dismissal of a breach of fiduciary duty claim because
the board had adequately informed themselves by seeking the advice of counsel
even though the exact content of that advice was not disclosed).
Another reason the court rejected the argument that the
attorney-client privilege was waived due to the "at issue" exception, was
because the information disclosed regarding any privileged communications was
summary in nature and comparable to what would be disclosed in a privilege log.
Redaction of Board Minutes
The court conducted an in camera review of
redacted board minutes to determine whether they were protected by the
The court recited the well-settled Delaware law
that: "the presence of a lawyer in a business meeting called to
consider a problem that has legal implications does not itself shield the
communications that occur at that meeting from discovery. Rather, it is
communications to a lawyer by or on behalf of a client for the purpose of the
rendition of legal services or lawyers' statements constituting legal service
that are protected." See footnotes 42 and 43. Likewise the
attorney-client privilege protects legal advice as opposed to business or
personal advice. See footnote 44.
However, communications that contain an inseparable,
combination of business and legal advice may be protected by the
attorney-client privilege. See footnote 45. Moreover, if it is a
"close call" whether a communication reflected in a document contains a mixture
of legal and business matters and is more closely related to legal advice as
opposed to business advice, the party asserting the privilege will be given the
benefit of the doubt. See footnote 46 and related text.
Read more Delaware business
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