Posts Tagged ‘Discovery’

Delaware Court Affirms Order Requiring Production of Privileged Documents

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday August 19, 2014 at 9:16 am
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Editor’s Note: The following post comes to us from Lewis R. Clayton, partner in the Litigation Department and co-chair of the Intellectual Property and ERISA Litigation Groups at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and is based on a Paul Weiss client memorandum. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

In Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, the Delaware Supreme Court formally recognized the “Garner doctrine,” an exception to the attorney-client privilege, in connection with a stockholder’s demand for records under Section 220 of the Delaware General Corporation Law, and confirmed that the exception also applies to other stockholder claims. The decision may allow derivative plaintiffs to obtain certain sensitive privileged communications and attorney work-product in cases involving substantial allegations of serious fiduciary misconduct.

…continue reading: Delaware Court Affirms Order Requiring Production of Privileged Documents

Supreme Court on Statute of Limitations for SEC Enforcement Actions

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday March 1, 2013 at 5:28 pm
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Editor’s Note: The following post comes to us from Jay B. Kasner, head of the Securities Litigation Practice at Skadden, Arps, Slate, Meagher & Flom, and is based on a Skadden memorandum by Mr. Kasner, Matthew J. Matule, Edward B. Micheletti, and Peter B. Morrison.

Gabelli v. Sec. & Exch. Comm’n, No. 11-1274 (U.S. Feb. 27, 2013)

In a unanimous opinion authored by Chief Justice Roberts, the U.S. Supreme Court held that the five-year limitations period that governs SEC enforcement actions begins to run when the alleged fraud is complete. The Court reversed the Second Circuit on the issue, which had held that the discovery rule applied in cases where the defendant allegedly committed fraud. The SEC alleged that two mutual fund managers allowed one of the fund’s investors to engage in market timing in the fund in exchange for an investment in a separate hedge fund, but the SEC filed the action more than five years after the conduct was alleged to have taken place. The Court explained that limitations periods ordinarily begin to run upon a party’s injury, but in cases of fraud — when the injury itself is concealed — courts have developed the discovery rule to protect individuals, who are after all not required to be in a constant state of investigation. That rationale however does not apply to the SEC, whose mission is to investigate (and prevent) fraud and which has statutory authority to demand detailed records, including those extra-judicial subpoenas. Therefore, the Court concluded the discovery rule does not apply to the SEC.

Click here to view the opinion.

Best Practices for Preparing a Clawback Agreement

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday November 21, 2012 at 8:41 am
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Editor’s Note: The following post comes to us from Scott J. Davis, head of the US Mergers and Acquisitions group at Mayer Brown LLP, and Michael E. Lackey, Partner-in-Charge of Mayer Brown’s Washington, D.C. office. This post is based on a Mayer Brown memorandum.

Scenario

A large corporation is sued over the alleged breach of a substantial contract. Due to the complex nature of the contract, the corporation’s business executives frequently sought advice from in-house counsel when entering into, and performing under, the agreement. The corporation’s in-house counsel has concerns that sensitive documents reflecting attorney-client communications—or even in-house counsel’s own work product—may be produced by mistake, given the volume of email and electronic documents that must be reviewed quickly.

Clawback Provisions Provide Protections and Cost Savings

Even when a party to a litigation employs precautions to prevent the inadvertent disclosure of privileged documents, some privileged materials are likely to slip through. Recognizing this likelihood, litigants commonly enter into “clawback agreements” at the start of discovery. Typically, a clawback agreement permits either party to demand the return of (that is, to “claw back”) mistakenly produced attorney-client privileged documents or protected attorney work product without waiving any privilege or protection over those materials.

Clawback agreements allow parties to specifically tailor their obligations (if any) to review and separate privileged or protected materials in a manner that suits their needs. For example, before discovery begins, the parties can agree on how they will search for and separate privileged or protected materials from their document productions. So long as the parties abide by the agreement, they will be permitted to take back any privileged or protected material inadvertently produced. Thus, parties can reduce their exposure to costly and time-consuming discovery disputes over whether the protection of privileged material was waived by its production.

…continue reading: Best Practices for Preparing a Clawback Agreement

The Anthropology of the Boardroom

Posted by Andrea Unterberger, Corporation Service Company, on Saturday May 28, 2011 at 9:51 am
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Editor’s Note: Andrea Unterberger is Vice President and Assistant General Counsel at Corporation Service Company (CSC). This post is an excerpt from the 2011 Edition of The Directors’ Handbook, by Thomas J. Dougherty of Skadden, Arps and published by CSC Media. In the first part of this year’s Foreword, Dougherty explores how directors can mitigate risks associated with communicating via e-mail and how best to handle such hidden challenges of directorship as charitable giving and overlapping opportunities. In the second part, Dougherty provides an in-depth look at the Whistleblower Provisions of the Dodd-Frank Act.

It would be natural to start this 2011 Foreword with a précis of the many dramatic regulatory developments newly affecting directors of publicly traded corporations beginning in 2011. Those changes, are, in fact, important to review and are summarized below. But with so much attention understandably focused on external requirements and pressures, it might be better to start first with a less highlighted and yet more central topic — namely, you, the director.

At the end of the day, the recent reforms deservedly catch headlines because they shift or channel some of the regulatory tides buffeting governance activity. But at the beginning of each day, the ability of the board to address those issues while running a successful business depends on you and your fellow directors. This suggests that we begin with recent developments concerning how you inform yourself as a director, how you deal with hidden burdens of the directorship, and how, as this Handbook describes in detail, you undertake the collectivity of tasks and human interactions, practices and rituals that together comprise what I call the anthropology of the boardroom.

…continue reading: The Anthropology of the Boardroom

Delaware Court Implements Guideline Regarding the Preservation of Electronic Information

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday February 27, 2011 at 10:23 am
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Editor’s Note: The following post comes to us from Kevin F. Brady, a Partner in the Business Law Group at Connolly Bove Lodge & Hutz LLP, and relates to guidelines for preservation of electronically stored information issued by the Delaware Court of Chancery, which are available here. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On January 18, 2011, the Delaware Court of Chancery became one of the first state courts to issue a guideline for the preservation of electronically stored information (“ESI”) (the “Guideline”). The stated purpose of the Guideline is a reminder to litigants and their counsel (inside and outside counsel) of their common law duty to preserve potentially relevant information to the litigation. The reason for the focus on preservation is that based on the Court’s experience, proper preservation can remedy many discovery ills that arise later in the litigation. Indeed, most courts would agree that glitches in preservation are often difficult to remedy after the fact.

…continue reading: Delaware Court Implements Guideline Regarding the Preservation of Electronic Information

“Utmost Seriousness” Necessary in Preservation of Electronic Evidence

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday February 16, 2010 at 9:08 am
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Editor’s Note: This post comes to us from Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton client memorandum by Maura R. Grossman.

In an important new decision, Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York has expanded upon her well-known Zubulake V opinion (229 F.R.D. 422 (S.D.N.Y. 2004)), setting forth crucial guidance for all parties to litigation as to their obligations to preserve and collect all potentially relevant records – whether paper or electronic – once litigation is reasonably anticipated, and providing an important example of the extremely serious consequences of failing to do so.

Pension Committee of the University of Montreal Pension Plan v. Bank of America Securities, Case No. 05 Civ. 9016 (SAS), involves an action under both the federal securities and New York State laws by a group of investors seeking to recover more than a half billion dollars in losses alleged to have resulted from the liquidation of two hedge funds in which they were investors. In her opinion, Judge Scheindlin closely reviews the discovery efforts of 13 plaintiffs and finds their failure to institute timely, written litigation hold notices, and their careless and indifferent collection efforts, resulted in the loss or destruction of evidence. Finding their conduct to be negligent or grossly negligent, Judge Scheindlin imposed sanctions, including a rebuttable adverse inference instruction, monetary fines, and, for two plaintiffs, limited additional discovery involving the search of their backup tapes.

…continue reading: “Utmost Seriousness” Necessary in Preservation of Electronic Evidence

 
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