A recent short ruling from the Delaware Court of Chancery examined one of the exceptions to the general rule that attorney-client privileged information is not subject to production. In Tigani v. Tigani, C.A. No. 2017-0786-KSJM (Del. Ch. April 10, 2019), the court addressed a motion to compel documents from various law firms that were withheld as privileged or which were produced in redacted form.  The issue in the case is whether the fiduciary exception or the crime-fraud exception to the general rule applicable to attorney-client privileged information would require the production of documents.

Short Overview:

The parties relied on the decision in Riggs National Bank v. Zimmer, 355 A.2d 709, 710 (Del. Ch. 1976), in which the court granted a motion to compel filed by beneficiaries of a trust regarding privileged information prepared for their benefit.  By contrast, a Special Discovery Master in the instant matter recommended that the motion to compel in this case be denied based on a prior decision of the Court of Chancery in separate litigation involving the parties, issued in 2010, which held that the ultimate client of the law firm whose documents were sought to be produced was akin to an adverse party—based on the facts in 2010–and on that basis the motion in the 2010 decision was denied. The Special Discovery Master applied that same conclusion to the instant case. That 2010 decision referred to above, as well as related Chancery decisions involving the internecine Tigani litigation, have been highlighted on these pages here.

Court’s Reasoning:

Taking a different view than the Special Discovery Master, the court in the instant ruling determined that the situation between the parties currently was substantially different than it was in 2010–and now the party seeking the production was not clearly adverse as it was in prior litigation in 2010. The court observed that there was no pending litigation between the parties from August 2011 through September 2017, and that the documents requested were created during this “period of peace.” See footnote 58.

The court reasoned further that whether or not disclosure of the documents in question should be allowed “must be determined in light of the purpose for which it was prepared.” (citing Riggs).  In order to determine in this case the purpose for which the documents requested were prepared, the court determined that inspection in camera was appropriate.

The court ordered the production in camera within in five days so that the court could make its own determination. See generally, by comparison, the Garner exception to attorney/client privilege, that allows in some instances the production of otherwise privileged attorney-client communication, for example, in the context of a  stockholder who seeks copies of the legal advice given to fiduciaries who are the subject of claims that they breached fiduciary duties. Cases applying Garner have been highlighted on these pages.

The bottom line is that there are exceptions to the general rule that attorney-client privileged communications cannot be compelled, and this decision provides an example of one of those potentially applicable exceptions.