Chancery Finds Party Waived Privilege When Documents Were Produced to FCC

Morris James LLP

In re Straight Path Communications Inc. Consol. S’holder Litig., C.A. No. 2017-0486-SG (Del. Ch. June 15, 2020)

Plaintiffs brought a Motion to Compel seeking thirty-one documents withheld by Defendant on attorney-client privilege grounds. The documents had previously been disclosed by Defendant to the Federal Communications Commission (“FCC”) in 2016 during an investigation related to the current litigation. Plaintiffs did not argue that the documents were not privileged at the time of creation, but rather that the privilege was waived when the Defendant provided those documents to the government.

The Court initially pointed out that the attorney-client privilege is typically waived when the communication is sent to a third party. It did note, however, that there are exceptions to this general rule. The Court, relying heavily on Saito v. McKesson HBOC Inc., stated that the primary reason why the privilege was waived was that no confidentiality agreement was entered into with the FCC. While the Defendant had requested confidential treatment, the FCC had not formally agreed to keep the documents confidential. Thus the Defendant had no reasonable expectation of continued confidentiality. Defendant merely hoped that the documents would remain confidential, which was not enough to protect the documents.

The Court recognized that Saito mostly involved the attorney work product doctrine, but noted that the work product doctrine is “more essential to our system of justice than is the attorney-client privilege. Thus, the latter is more readily waived.” The Court pointed out that the producing party in Saito had a confidentiality agreement with the SEC when producing its documents, and the Saito Court held that the privilege was waived for the documents that party produced to the SEC before entering into that agreement.

Based on this analysis, the Court found that Defendant had no reasonable expectation of privacy when it provided the documents to the FCC during the investigation, and thus the privilege was waived.

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