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This post was prepared by an Eckert Seamans associate.

This Order is a must read for all counsel who practice before the Court of Chancery. The Court has once again expressed its intolerance for abusive and less than candid discovery practices.  In In Re Oxbow Carbon LLC Unitholder Litigation, C.A. No. 12447-VCL (consol.) (Del. Ch. June 2, 2017) (Order), Vice Chancellor Laster imposed a strict and detailed discovery protocol to both rectify prior abuses by one of the litigants and to effectuate the prompt correction of any future discovery deficiencies.

This case was the subject of a prior, extensive written discovery Order previously detailed on these pages. In the more recent discovery dispute, after reviewing the parties’ written submissions and oral arguments, the Court entered a seven-page Order addressing discovery minutiae, such as de-duplication of documents, TIFF productions and the document custodian interview process.

Facts: Two of the individual defendants filed a motion against their corporate adversaries for discovery misconduct.  The alleged misconduct included, among other things: (a) the production of numerous nearly or completely duplicative documents with inconsistent redactions; (b) the production of documents without identifying the source of those documents; and (c) misleading representations to the Court about the production efforts.

The Court found that the offending corporate parties made a “plainly wrong” statement with regard to their ability to review documents and other “untimely and unreliable” representations about their discovery efforts.

Result: The Court entered a detailed Order, which imposed upon the offending litigants a number of notable obligations, including:

(a) the requirement to designate a partner-level Delaware attorney to receive and address any noted discovery deficiencies within 96 hours;

(b) the preparation of a table (to be overseen and certified by a senior Delaware lawyer) listing the details of all interviews with the corporate custodians including scripts used to interview custodians, dates of the interviews, specific questions posed to the custodians about personal email accounts and text messages used for business purposes, and the collection efforts of text messages and personal emails;

(c) the consistent production of all TIFF documents in their least redacted format;

(d) the de-duplication of joint trial exhibits; and

(e) the obligation to produce previously deposed witnesses within three days upon request of the individual litigants who filed the motion to compel.

Takeaways:  The Court continues its hands-on approach to discovery disputes and displays its willingness to impose strict requirements on, and close monitoring over ongoing discovery compliance once a pattern of non-compliance has been demonstrated.

The Court has continued a prior practice of requiring a partner-level Delaware attorney to be principally responsible for discovery issues as a means of more closely supervising the discovery process.

An Eckert Seamans associate prepared this overview.

In a recent transcript ruling in the case styled Doctors Pathology Servs., PA v. Gerges, C.A. No. 11457-CB, transcript (Del. Ch. Feb, 15, 2017), Chancellor Bouchard provides additional guidance to attorneys seeking to file motions to compel discovery in the Delaware Court of Chancery.  This ruling should be considered in conjunction with the Court’s opinion last month in the In Re Oxbow case covered here, which discussed key litigation rules in connection with granting a motion to compel discovery responses.

Background: The plaintiff brought suit against a former employee and the employee’s new medical practice for tortious interference and misappropriation of trade secrets. The plaintiff filed a motion to compel and for sanctions regarding the defendants’ discovery responses.  Upon hearing oral argument, the Court detailed the proper content of a motion to compel and noted concerns over the failure to be upfront with document production.

Court’s Analysis: The Court explained that a discovery-related motion to compel should specifically identify the discovery requests at issue by number. In filing the motion with the Court, the moving party should also attach copies of the requests and the opposing party’s responses.  It is not proper to simply attach the parties’ meet and confer correspondence and ask the Court to determine exactly what the problems are without additional explanation.  Instead, the motion itself must identify the discovery requests at issue and explain the grounds for seeking the information.

Despite the Court’s concerns with the content of the motion at issue, Chancellor Bouchard did address the plaintiff’s complaint that documents expected to be in the defendants’ possession were produced by third parties, but not by the defendants. The Court explained that if true, the plaintiff’s allegations suggest that the defendants were not entirely forthcoming with document production.  Withholding discovery until information is revealed by third parties would put the defendant “in a very bad spot when this litigation is concluded.”

If documents expected to be contained in the defendant’s files were not produced until third parties revealed the information, it would “bring[] into question fundamental issues of his credibility.” Thus, counsel was advised to inform the defendant of those potential consequences.

On a related note, the parties were required to be forthcoming with access to documents that had been produced with discovery responses. Passwords should be provided expeditiously to unlock encrypted documents, or those files should be produced in hardcopy format.

The Court also reminded the parties that they are required to abide by their confidentiality agreement in producing documents to potential experts. For many reasons, it would be a bad idea to ask the client to pass on confidential documents to an expert rather than exchange confidential discovery directly between counsel and the expert.

Conclusion: The Court explained that its “bottom line” was that the parties should be forthcoming and cooperative with document production. Without more specific details in the motion to compel, such as the exact deficiencies in enumerated replies, the Court could not provide additional guidance on issues related to interrogatory responses.  Because the motion at issue was missing necessary content, although some concerns could be addressed on oral argument, sanctions were not warranted.

Why this ruling is noteworthy: All those who litigate in the Delaware Court of Chancery need to read an important opinion issued yesterday that enforces key litigation rules by way of granting a motion to compel discovery replies. The court, in the case styled In Re Oxbow Carbon LLC Unitholder Litigation, Consol. C.A. No 12447-VCL (Del. Ch. March 13, 2017), deemed waived a multitude of “non-substantive, generic” objections made to providing discovery responses, based on the deficiencies the court found in those objections. Although prior rulings of the court have similarly enforced the same discovery standards, see, e.g., recent case highlighted here, and synopsis of earlier decision here, this opinion provides comprehensive and formal additional guidance regarding the doctrinal underpinnings of the court’s conclusions and the reasons for striking the objections, with copious citations to Delaware case law and scholarly articles. The opinion includes reference to federal cases and commentary that are instructive because the Chancery Rules of Procedure are based on the federal rules of civil procedure.

Bottom line: This decision provides clear “step by step” instructions for litigators who want to avoid waiver of objections to discovery requests, and waiver of claims of privilege and work product. Nonetheless, as an anecdotal observation, it remains less than unequivocally certain that all members of the Delaware judiciary will strictly enforce the standards explained in this opinion–with the same vigor or rigor as applied in this decision–even though the same rules involved in this case and the same cited authority are applicable in other trial courts in Delaware. I’m also willing to bet that a large percentage of practitioners do not follow religiously the standards enforced in this decision–and are never challenged via a motion to compel.

Key principles/takeaways from this decision:

  • Chancery Court Rule 26(b)(1) is the starting point for an analysis about what is “discoverable”. The “spirit of Rule 26(b) calls for all relevant information, however remote, to be brought out for inspection not only by the opposing party but also for the benefit of the Court….”
  • When a party objects to discovery, “the burden is on the objecting party to show why and in what way the information requested is privileged or otherwise improperly requested.”
  • Once the requesting party provides “some minimal” justification for the request, the burden shifts to the responding party to demonstrate why discovery should be limited or foreclosed. See footnote 2 for cases cited.
  • Three requirements for a valid objection to discovery requests: (i) The objection must be specific; (ii) it must explain why it applies on the facts of the case to the request being made; (iii) if a party is providing information subject to the objection, the party must articulate how it is applying the objection to limit the information it is providing. Moreover, objections must be “plain enough and specific enough so that the Court can understand in what way the discovery is claimed to be objectionable.” (citing Van de Walle, 1984 WL 8270, at *2.)
  • Each of the challenged objections was reviewed, and “generic, non-substantive objections” such as assertions that the requests were “overly broad”, excessive or “unduly burdensome” or not relevant, were overruled. Rather, in order for such objections to be valid, the objecting party needs to “submit affidavits” or “offer evidence” revealing the nature of the burden.
  • Likewise, objections asserting “vague or ambiguous” questions were overruled because “they should have explained in what way the terms were giving them trouble, interpreted the terms in a reasonable and constructive way, and set out in their responses how they were interpreting them.”
  • A bare assertion of privilege will not suffice. Privilege cannot be properly asserted unless a party provides “sufficient facts as to bring the identified and described document within the narrow confines of the privilege.” Separately, privilege in this case was also waived because the facts sought to be discovered were “at issue” in the litigation, and the “truthful resolution of [those facts] requires an examination of the confidential communications.”
  • Work product likewise cannot be protected by invoking “in anticipation of litigation” as a “formulaic set of magic words” without specifying the litigation involved and satisfying the following requirements on a 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, (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 regards to this last requirement, the privilege log must show sufficient facts as to bring the identified and described document with the narrow confines of the privilege. Slip op. at 11 (citation omitted).

  • Work product was waived in this case because the log did not satisfy the foregoing requirements. In addition, “routine investigations” are not generally protected by work product.

In sum, many examples recited in this opinion of “non-substantive, generic” objections (that I know are commonly used by many litigators), were overruled as invalid, such as objections based on relevance, and unspecified assertions that the requests were overly broad, overly burdensome, or ambiguous.

SUPPLEMENT: The court issued a supplemental opinion on March 30, 2017 denying the motion for reargument (notwithstanding the attempt by the movant to categorize it as a “request for clarification”).  In re Oxbow Carbon LLC Unitholder Litigation, Consol. C.A. No. 12447-VCL (Del. Ch. March 30, 2017). Although the Memorandum Opinion of five pages is important for an understanding of the foregoing original court opinion, one part of the decision denying the motion for reargument is especially noteworthy: On page 4, the court explained that a privilege was waived for those documents on the privilege log “for which no attorney is identified.” 

The court also was not persuaded that one might discern that an attorney was involved if one “dug into the documents that corresponded to the entries on the log.”  The court explained that it previously considered and rejected that argument.  It added that the requirements for a privilege log are clear and the prior “discovery-obstructing” stances did not allow the movant to receive the benefit of the doubt.  The court also cited to a prior decision on privilege logs and waiver in Klig v. Deloitte, 2010 WL 3489735, at * 3 (Del. Ch. Sept. 7, 2010), highlighted on these pages.