Why this case is noteworthy:  The Court of Chancery provides a must-read primer on privilege and redaction logs – – and penalties for non-compliance – – in a decision on a motion to compel in Mechel Bluestone, Inc. v. James C. Justice Companies, Inc., C.A. No. 9218-VCL (Del. Ch. Dec. 12, 2014).  The underlying dispute related to a contingent payment provision of a merger agreement, but an issue arose concerning the adequacy of the plaintiffs’ privilege and redaction logs.  The original logs provided no information other than the document date, the privilege asserted and a description of the grounds for asserting the privilege.  The entries did not identify the parties to the communication or the attorney involved, and were listed in no particular order.  The “players list” provided did not list all of the unique names found in the privilege log, and did not differentiate between attorneys and non-attorneys.

Deficiencies in Logs Produced

After a series of amended privilege and redaction logs were produced, along with amended “players lists,” serious deficiencies still existed: the privilege log lacked information about the author and recipients or did not identify the attorney whose advice was reflected in the document; it contained entries for documents shared with third parties, without explaining their role in providing legal advice; it identified e-mails with attachments, but it was unclear if plaintiff had produced the attachments; the redaction log did not list Bates numbers for documents produced in redacted form; and certain documents were produced that were redacted in their entirety, except for their Bates numbers.  Although a fourth amended set of logs were produced, the court still found that some of the claims of privilege had been waived and ordered a special discovery master to address other challenges to the privilege assertions, including those concerning the accuracy of the descriptions.

Requirements for Privilege Logs

The court stressed that senior Delaware attorneys should provide guidance during the privilege assertion process.  This is a requirement unwelcome by some but still expected by the court.

The court started its explanation of privilege by noting that the party asserting the privilege bears the burden of establishing that information that is otherwise discoverable is privileged.  To provide sufficient facts to show that the identified document is within the privilege, the following items should be identified on the privilege log:

 (a) the date of the communication, (b) the parties to the communication (including their names and corporate positions), (c) the names of the attorneys who were parties to the communication, and (d) [a description of] the subject of the communication sufficient to show why the privilege applies, as well as [the issue to which] it pertains . . . . With regard to this last requirement, the privilege log must show sufficient facts as to bring the identified and described document within the narrow confines of the privilege.

Penalty for Failure to Produce Compliant Logs: Waiver

Because Mechel’s amended logs were still so deficient that they failed to meet that standard, the court deemed the privilege waived as to certain categories of documents, including entries with no pertinent information, documents re-designated as ‘non-responsive,’ those shared with third parties, and those that failed to identify any parties from the ‘players list.’  Other challenges to privilege assertions were referred to a special discovery master.