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Barry M. Klayman and Mark E. Felger Barry M. Klayman and Mark E. Felger

In Shareholder Representative Services v. RSI Holdco, C.A. No. 2018-0517-KSJM (Del. Ch. May 29), Vice Chancellor Kathleen McCormick addressed the question of when a buyer may use the acquired company’s privileged, pre-merger attorney-client communications in post-closing litigation against the seller? In this case, the sellers had secured a provision in the merger agreement which preserved their ability to assert privilege over pre-merger attorney-client communications. The provision also expressly precluded the buyer from using or relying on those privileged communications in post-closing litigation against the sellers. Nevertheless, the buyer argued that, because the sellers did not remove or segregate the privileged communications from the acquired company’s computers and email servers transferred to the surviving company, they had waived any privilege and the buyer could use the communications in litigation against the sellers. The vice chancellor disagreed.


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