Designating Documents as Confidential and Requesting They Remain Confidential Insufficient to Avoid Waiver of Attorney-Client Privilege

L-R Francis Pileggi and Chauna Abner, Lewis Brisbois  Bisgaard & Smith.

The Delaware Court of Chancery recently held that a party waived attorney-client privilege by producing documents to a federal commission during the course of an investigation without requiring the commission to sign a confidentiality agreement first.

In In re Straight Path Communications Consolidated Stockholder Litigation, C.A. No. 2017-0486-SG (Del. Ch. June 15, 2020), the plaintiffs sought to compel the disclosure of 31 documents the defendant corporation previously produced to the Federal Communications Commission (FCC) in connection with an investigation. The defendant withheld the documents from the plaintiffs on the basis that such documents were privileged. The plaintiffs did not dispute that the documents were privileged when created, but instead argued that the defendant waived that privilege by producing the documents to the FCC. The defendant argued that it did not waive privilege because when it produced the documents to the FCC, it designated the documents as confidential and requested that the documents remain confidential.

The court explained that the defendant bore the burden of proving that the documents at issue were privileged, and while the defendant failed to satisfy that burden, the plaintiffs met their burden of proving that the defendant waived privilege regarding the documents. After exploring the purpose of the attorney-client privilege doctrine, the court explained the facts and prior holdings in Saito v. McKesson HBOC, 2002 Del. Ch. LEXIS 125 (Del. Ch. Nov. 13, 2002).