In a recent letter ruling in an LLC books and records action, the Court of Chancery, in a Magistrate’s letter ruling, found that privilege was waived despite the inadvertent disclosure of those privileged communications. Straub v. Persolve, LLC, C.A. No. 2025-0636-DH (Del. Ch. Oct. 8, 2025).

The reasoning for the result was intertwined with the finding that there was a violation of both discovery orders and deadlines in a scheduling order. My intent in this short blog post is only to provide a few of the highlights that I find most noteworthy and of widespread usefulness.

Highlights

• In connection with the inadvertent disclosure of privileged information, out-of-state counsel, which the court refers to as OOSC, admitted that they did not take the “most reasonable step” of reviewing the documents before they were disclosed. Specifically, the court found that he “elected not to conduct a final review of the .zip production file. That basic step would have prevented the inadvertent production. OOSC’s behavior is at odds with the reasonable precautions taken by the attorneys in Kent. [In re Kent County Adequate Public Facilities Ordinance’s Litigation, 2008 WL 185 1790 (Del. Ch. Apr. 18, 2008)]. Slip op. at 9.

• The court referred to Delaware Rule of Evidence 502 which defines the attorney-client privilege and also defines when such communications are considered confidential. Slip op. at 6.

• The court found in this case that “a cursory, non-contextual scan of the images would have revealed a volume of documents far beyond what OOSC initially designated as responsive. This type of review could have been accomplished in minutes, is not burdensome, and is a basic responsibility of counsel.” Slip op. at 9.

• Unlike the Kent case referred to above, the inadvertent disclosure in this case dwarfed previous disclosures and the inconsistency and shear volume would have been apparent had counsel conducted a cursory check. Id. at 10.

• The court discussed the three criteria that will be considered to determine when disclosure will not operate as a waiver:  “(1) The disclosure is inadvertent; (2) The holder of the privilege or protection took reasonable steps to prevent disclosure; or (3) The holder promptly took reasonable steps to rectify the error, including following any applicable court procedures to notify the opposing party or to retrieve or request destruction of the information disclosed,” citing DRE 510(c). Slip op. at 7.

• The court discussed all the factors in detail, but the most notable is that the disclosing party failed to previously disclose that he possessed relevant information, but instead created an inference that he had no access to them, even though they were discoverable. Slip op. at 11.

• Among the important principles with broad application that the court relied on include the following: “Discovery abuse has no place in Delaware courts, and the protection of litigants, the public, and the bar demands nothing less than that Delaware trial courts be diligent in promptly and effectively taking corrective action to secure the just, speedy and inexpensive determination of every proceeding before them.” Slip op. at 12-13.

• Also noteworthy is the court’s observance that disregarding provisions in the scheduling order that governs discovery is engaging in discovery abuse. Slip op. at 13. See Court of Chancery Rule 37(b)(2) regarding possible sanctions for discovery violations.

• The court found that it was a misrepresentation to give the impression that the disclosing party had no access to the relevant, discoverable emails. The court found that it was a violation of the discovery rules when he failed to accurately depict his access to discoverable emails in the most general terms. Slip op. 13-14.

• The inadvertent production revealed that the disclosing party possessed a group of responsive emails that he did not intend to provide. The court found that this was a violation of the “spirit of discovery and the scheduling order” and required sanctions. Slip op. at 15.

• Especially noteworthy is the recitation by the court of the well-settled Delaware discovery standard that self-collection by interested parties is not a best practice. Slip op. at 15-16.

• Lastly, the court addressed an alleged violation of the Delaware Lawyers’ Rule of Professional Conduct 4.4(b). Importantly, the court noted that Rule 4.4(b) requires notification when a party receives inadvertently produced information, but it does not govern whether an attorney receiving an inadvertently received document must return the document. Id. cmt. [2] Rather, Delaware caselaw determines such a question. Slip op. at n.4.

• The court also observed that the Delaware Supreme Court supervises compliance with the Rules of Professional Conduct and, in general, trial judges have no independent jurisdiction to enforce them. Id. at 17.

• The court noted in closing that the animosity between counsel led to a communication breakdown, and many, if not all, of the problems presented here could have been avoided had the lines of communication remained open. Id. at n.6.

Takeaways:

• Even inadvertent disclosure of privileged documents can lead to waiver of a privilege.
• The court discussed the minimum level of review of documents that will be considered reasonable prior to production in order to avoid waiver in the context of inadvertent disclosure of arguably privileged documents.
• The Rules of Professional Conduct may require that the recipient of inadvertently disclosed data notify the sender, but only nuanced case law resolves the issue of when and under what circumstances one is entitled to claw back those documents.
• Rule of Evidence 502 defines attorney/client privilege and when a document should be considered confidential.