Privileged Information is Not Necessarily Always Privileged
The Delaware Supreme Court recently ordered Wal-Mart to disclose allegedly privileged documents to the Indiana Electrical Workers Pension Trust Fund IBEW (“IBEW”). IBEW is investigating whether Wal-Mart directors and executives attempted to conceal alleged wrongdoing related to allegations of bribery by a company subsidiary as part of potential claims by shareholders. The Delaware Supreme Court determined that IBEW proved that the documents were “necessary and essential” to achieve “a proper purpose.” Accordingly, the Delaware Supreme Court ordered Wal-Mart to produce documents from 12 custodians and their assistants related to the internal investigation of Wal-Mart’s alleged violation of the Foreign Corrupt Practices Act. The Delaware Supreme Court did not waive the privilege entirely but instead determined that the shareholders were entitled to the discovery of limited privileged material in this specific circumstance.
As a result of the ruling, Wal-Mart must provide IBEW with internal documents about what directors and executives knew about alleged bribes associated with real-estate deals in Mexico. In addition to the shareholder investigation, U.S and Mexican prosecutors are investigating the allegations of bribery.
The Wal-Mart ruling is a good reminder to everyone: counsel should not necessarily rely on assertions of privilege to protect documents from discovery, at least in the initial investigations regarding shareholder disputes.
Sources: http://www.bloomberg.com/news/2014-07-24/wal-mart-told-by-court-to-turn-over-bribery-probe-files.html http://courts.delaware.gov/opinions/download.aspx?ID=209130
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