Court Bars Production of Expert Report for Board

New Jersey Carpenters Pension Fund v. infoGroup, Inc., C.A. No. 5334-VCN (Del. Ch. Aug. 16, 2012).

Issue: Can Plaintiff compel the expert report prepared by the company’s counsel for the board in anticipation of litigation?

Short Answer: No, based on the facts of this case. Importantly, the Court of Chancery ruled that Rule 26(b)(3) is the standard that applies to determine if a report for the board must be produced as an exception to the work product doctrine—and not the less strenuous standard for board reports in the context of fiduciary litigation when the attorney-client privilege is at issue, in which case the standard used is often traced to Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970). See also, Ryan v. Gifford, 2007 WL 4259557, at *3 n.4 (Del. Ch. Nov. 30, 2007). The Court did not follow the Garner test even though in dictum from a 1993 case the Delaware Supreme Court suggested that the Garner standard would govern the discovery of work product materials. See footnote 17.

Background:
For more detailed factual background details, refer to the prior Chancery decision in this case highlighted on these pages here.

This letter ruling decided several motions to compel personal financial information from the former chairman of infoGroup, Inc. The core allegation at the root of this case is that the former chairman forced the other members of the board to enter into a merger in 2010, on terms unfair to infoGroup shareholders, for the primary reason of solving his own personal liquidity crisis. Thus, one motion to compel sought to obtain his personal financial records for that period of time.

Of more widespread interest and applicability, however, was a motion to compel by Plaintiff that sought the production of a report that was prepared at the request of the company’s outside counsel. It was a report by a handwriting expert as part of the investigation of a leak of confidential information. All parties agreed that it was “work product” because it was prepared as part of a strategy at the time that included a potential lawsuit.

Analysis

The Court’s analysis of the discoverability of the expert investigative report prepared at the request the company’s counsel for (at least) certain members of the Board, and which is subject to the work product doctrine, deserves to be presented verbatim, as follows:

The parties also debate the proper standard for assessing a claim under the work product doctrine. The Plaintiff contends that Garner v. Wolfinbarger and its progeny, which all agree would provide the framework for assessing a claim of attorney-client privilege in the context of fiduciary litigation, applies. Under Garner, the party seeking access must satisfy a good faith standard which requires a showing of: “(i) [that] the claim is colorable; (ii) the necessity or desirability of information and its availability from other sources; and (iii) the extent to which the information sought is identified as opposed to a fishing expedition.” In contrast, Court of Chancery Rule 26(b)(3) sets a more stringent standard for access generally to materials protected under the work product doctrine. Discovery of such materials may only be achieved if the party is able to show that it “has a substantial need for” the documents at issue and it “cannot acquire a substantial equivalent of the materials by other other means without undue hardship.” (See omitted footnotes 14 to 21 and citations therein.)

Although the Delaware Supreme Court has indicated in what appears to have been dictum that the Garner good faith standard governs discovery of work product materials, this Court has, in the years following that decision, held that Garner does not apply to work product materials. In Saito, this Court explained that whether a party may discover work product is determined solely by looking to Court of Chancery Rule 26(b)(3), and thus, that the Garner good cause standard is inapplicable to the issue of whether work product is discoverable (emphasis added):

“Under Chancery Court Rule 26(b)(3), a party may discover nonopinion work product if it shows it has a substantial need for the materials and it cannot acquire a substantial equivalent without undue hardship. . . . Plaintiff has failed to meet the substantial need/undue hardship test in this instance. In his opening brief, plaintiff applies the
Garner factors to the work product, even though this Court has held that there is no Garner exception to the work product privilege.”

The rationale for looking only to Rule 26(b)(3) comes from the text of the rule itself:

[A] party may obtain discovery of documents and tangible things otherwise discoverable . . . [, which were] prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representative . . .only upon a showing that the party seeking discovery has substantial need of the materials . . . and . . . is unable without undue hardship to obtain the substantial equivalent . . . .

Thus, Rule 26(b)(3), by its own terms, is the only framework that the Court should use in determining whether work product is discoverable.

* * *

Therefore, Garner is inapplicable to work product discovery, and the Plaintiff must show substantial need and undue hardship to be entitled to the Kessler Report. (emphasis added and internal citations omitted.)

The Court concluded that the Plaintiff did not carry its burden to demonstrate either substantial need or undue hardship and, therefore, the motion to compel the report was denied. In light of the decision based on the work product doctrine, the Court did not need to address the attorney-client privilege analysis.