Cendant Corp. v. Commonwealth General Corp.

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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY CENDANT CORPORATION, a Delaware corporation, a successor to HFS INCORPORATED, a Delaware corporation, Plaintiff , v. COMMONWEALTH GENERAL CORPORATION, a Delaware corporation, ) ) ) ) ) ) ) ) ) ) ) ) C.A. No. 98C-10-034 MMJ Defendant. ORDER Upon the Court s In Camera Review of Documents Deemed Privileged Submitted: May 31, 2006 Decided: June 30, 2006 Thomas J. Allingham, II, Esquire, James W. Brown, Esquire, Skadden, Arps, Slate, Meagher & Flom, Wilmington, Delaware, Attorneys for Plaintiff Cendant Corporation Jon E. Abramczyk, Esquire, Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, Kevin M. Dinan, Esquire, King & Spalding, Washington, DC, Attorneys for Commonwealth General Corporation JOHNSTON, J. 1. By Memorandum Opinion dated April 25, 2006, the Court considered Defendant Commonwealth General Corporation s Motion to Compel Production of Privileged Documents Cendant has put At Issue. The Court granted Commonwealth s Motion, subject to the following procedure: Cendant is hereby ordered to identify documents listed is its privilege log that are responsive to Commonwealth s requests for production. As to each listed document, Cendant may provide the Court with its position as to whether Commonwealth has or lacks substantial need for the document; and whether the information is reasonably available through other sources. The Court will review the identified documents in camera to evaluate whether the document is related to a subject placed at issue. 2. Cendant submitted a privilege log and a binder of 26 tabbed documents. The Court has now reviewed each document and considered Cendant s arguments as to why each document should not be produced. 3. The Court finds that the following documents are not subject to production by Cendant. Document Description & Tab Potential Category 1 Discussion Due Diligence (Category 1) Cendant produced this document to Commonwealth in redacted form. The 10/23/97 letter from Hele of redacted handwriting is not relevant to any Merrill Lynch to Katz, with issue in dispute. lawyer s handwriting 2 Tab Document Description & Potential Category Discussion 3 Due Diligence (Category 1) Cendant produced this document to Commonwealth in redacted form. The Management Presentation redacted parts are substantively duplicative of material already produced or not booklet, with lawyer s relevant to any issue in dispute. handwriting 4 Due Diligence (Category 1) Cendant produced this document to Commonwealth in redacted form. The redacted handwriting is not relevant to any 11/6/97 due diligence list issue in dispute. (faxed), with lawyer s handwriting 5 Due Diligence (Category 1) Not relevant to any issue in dispute. Cover memo dated 11/10/97. Tax and employee benefits (author and recipient are outside counsel) 6 Due Diligence (Category 1) Not relevant to any issue in dispute. Memo - HFS-Project Seed Employee Benefits Due Diligence 7 Due Diligence (Category 1) Not relevant to any issue in dispute. Detailed listing of individual employee benefits 11 Due Diligence (Category 1) Not relevant to any issue in dispute. Undated drafts of memo re: intellectual property 3 Tab Document Description & Potential Category 12 Due Diligence (Category 1) Not relevant to any issue in dispute. Discussion Undated draft agreement sections 13 Due Diligence (Category 1) Not relevant to any issue in dispute. Redacted memo dated 11/20/97 re: draft agreement - change in control issues 14 Due Diligence (Category 1) Not relevant to any issue in dispute. Memos dated 11/21/97 and 11/24/97 summarizing Affiliate Agreements (author and recipient are outside counsel) 15 Due Diligence (Category 1) Cendant has already produced this document to Commonwealth in final form. The draft and final document are not 11/25/97 draft letter from materially different. Silverman to Hele (Providian agent) re: final definitive proposal 16 Due Diligence (Category 1) Not relevant to any issue in dispute. Memo re: divested business, properties and material agreements 17 Due Diligence (Category 1) Not relevant to any issue in dispute Redacted memo dated 12/2/97 re: draft agreement change in control issues 4 Tab Document Description & Potential Category Discussion 18 Due Diligence (Category 1) Cendant has already produced this document to Commonwealth 12/02/97 memo re: outstanding due diligence requests, with in-house counsel s name handwritten on front 23 Due Diligence (Category 1) Not relevant to any issue in dispute Redacted memos dated 4/28/98 re: change in control issues 24 May 18 Meeting (Category 4) 05/08/98 fax of agenda for meeting, with lawyer s handwritten notes 25 Due Diligence, May 18 Meeting (Categories 1 and 4) Cendant produced this document to Commonwealth in redacted form. The handwritten notes are not responsive to the issue of what statements actually made at May 18 meeting are alleged by Cendant to be fraudulent. Substantively duplicative of material already produced Draft memos dated 6/25/98 through 7/6/98 re: Providian Stock Purchase Agreement, Representation and Current Compliance 5 Tab 27 Document Description & Potential Category Notice of Litigation (Category 3) Drafts of letter to LeBoeuf re: notice of Providian Financial Corp. Lawsuit 4. Discussion Cendant has already produced this document to Commonwealth in final form. The drafts and final document are not materially different The Court finds that the following documents must be produced by Cendant to Commonwealth. As to each of these documents, the Court has determined that Cendant has waived the attorney-client privilege by raising one of the following four issues in the litigation: (1) what Cendant and its advisors did or did not learn about Providian s business during due diligence, including what they knew about the right to use the Providian name after closing; (2) the negotiating history of the Stock Purchase Agreement between Commonwealth and Cendant; (3) when Commonwealth actually provided Cendant notice about the existence of litigation involving the Providian name; and (4) what statements were made at a May 18, 1998 meeting that Cendant alleges were fraudulent. In order to fully and fairly litigate the factual and legal issues in this case, Commonwealth needs to review these documents. Other sources of the information contained in these documents are not reasonably available. 6 Tab Document Description & Potential Category 2 Due Diligence, May 18 Meeting (Categories 1 and 4) Excerpts from lawyer s handwritten notes 8 Due Diligence (Category 1) Memo dated 11/13/97 re: due diligence meetings, with focus on creating an outline of legal and regulatory issues based on document review. Author and recipients are all outside counsel. 9 Due Diligence (Category 1) Series of draft outlines, with different draftline dated, apparently relating to binders in the due diligence room 10 Due Diligence (Category 1) Drafts of memo dated 11/20/97 re: Preliminary Due Diligence Review. 19 Due Diligence (Category 1) Memo dated 12/3/97 re: status of title to the Providian Service Mark 20 Due Diligence (Category 1) Redacted memo dated 4/3/98 re: Providian Name Change 21 Due Diligence (Category 1) Redacted memo dated 4/3/98 re: Providian Name Change 22. Due Diligence (Category 1) Redacted memo dated 4/14/98 re: Providian name and change in control issue 7 Tab Document Description & Potential Category 26 Due Diligence (Category 1) Memo dated 7/30/98 re: Barker litigation IT IS SO ORDERED. __________________________________ The Honorable Mary M. Johnston 8

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