In a books and records demand under Section 220 of the Delaware General Corporation Law, the Court of Chancery has broad discretion to determine which categories of books and records a Delaware corporation must produce for inspection.

The question of whether a corporation must produce documents that are subject to the attorney-client privilege has recently been addressed by the Delaware Supreme Court.  The short answer is yes, under certain circumstances.

In the case of Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, Del. Supr., No. 614, 2013 (July 23, 2014), the Delaware Supreme Court was confronted with this very issue.  The Court held that an exception to the attorney-client privilege, and also the attorney work product doctrine, applies if the stockholder needs the otherwise inaccessible information to bring a suit against a director or officer for breach of fiduciary duty.  This exception is known as the “Garner Doctrine”, established in the 5th Circuit decision of Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970).

This decision and standard should be considered by any litigant in connection with the inspection of privileged information of a Delaware corporation.

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.