Plaintiff brought this suit to compel specific performance of a merger agreement with defendants.  Defendants refused to close on the deal after receiving anonymous letters containing data integrity allegations involving Akorn’s executive vice president who was in charge of its quality assurance department.  Initially, the parties entered into a common interest agreement and jointly conducted an internal investigation.  Over time, that arrangement fell apart and both parties conducted parallel investigations through their outside counsel with the assistance of consultants.  Plaintiff filed a motion to compel production of materials concerning defendants’ data integrity issues.

The Court of Chancery ordered that both parties produce documents relating to their internal investigations conducted by counsel and limited the categories of documents that could be withheld as privileged.  The Court reasoned that both sides had sufficiently put their investigations at issue such that the same rules should apply to both.  In addition, the parties had made a choice to have their legal counsel run each investigation instead of having non-legal professionals conduct them.  Given this fact and acknowledging that attempting to separate the privileged versus the non-privileged information in the context of an internal investigation is very difficult, the Court gave a few bright line rules for the parties to follow.

The Court ordered production of all communications and documents involving the non-legal investigation by outside consultants, even if counsel was copied on the communications.  Next, the Court ordered that client communications with counsel should be produced to the extent that counsel was only courtesy copied or blind courtesy copied on the email.  If counsel was a direct sender or recipient, those emails could be reviewed by Delaware counsel for privilege and portions that were privileged or protected by work product could be withheld or redacted.  The Court also ordered production of witness interview notes because of the highly expedited nature of the case, despite the fact that those would ordinarily be protected by work product.

While the orders in this case were based on the expedited nature and the particularized facts of this matter (and acknowledged by the Court to potentially be both over- and under-inclusive), a company conducting an internal investigation should consider having a non-attorney lead such an investigation.  Because the Court does not consider the investigation to be inherently legal and does not consider the underlying facts gathered and factual analysis to be privileged, practitioners should consider clearly separating the legal aspects of the investigation to help to later protect the information that is truly privileged.