In Mechel Bluestone v. James C. Justice Cos., C.A. No. 9218-VCL (Del. Ch. Dec. 12, 2014), the Delaware Court of Chancery decided a motion to compel the production of documents and a request for sanctions related to purportedly deficient privilege logs. The defendants claimed that the plaintiffs’ original privilege log, and four subsequent amendments to that log, were “so flawed” that the plaintiffs should be ordered to produce all of the documents listed on the log. The court did not impose this harsh sanction, but it did hold that the plaintiffs waived the privilege with respect to documents that were not adequately described on the privilege logs. In so finding, the court reiterated that “preparing a privilege log with integrity requires the involvement and oversight of senior lawyers who know the applicable standards, understand the roles of the individuals involved in the communications, and can make textured judgment calls on a principled basis.”
The facts underlying the discovery dispute involved a merger agreement between plaintiffs Mechel Bluestone Inc. and Mechel Mining OAO and defendants associated with James C. Justice Cos. Inc. Under the agreement, Mechel acquired from Justice certain entities that owned coal properties and associated assets in West Virginia. As part of the consideration under the agreement, the parties agreed that if additional coal were to be discovered within two years, referred to as contingent reserves, Mechel would be required to pay additional amounts to Justice. The agreement called for a mining consultant, Weir International Inc., to assess the volume of any contingent reserves.
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