Hexion Specialty Chemicals v. Huntsman Corp.
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COURT OF CHANCERY OF THE STATE OF DELAWARE STEPHEN P. LAMB VICE CHANCELLOR New Castle County Court House 500 N. King Street, Suite 11400 Wilmington, Delaware 19801 Submitted: August 12, 2008 Decided: August 12, 2008 Donald J. Wolfe, Jr., Esquire Potter Anderson & Corroon LLP Hercules Plaza P.O. Box 951 Wilmington, DE 19899 Bruce L. Silverstein, Esquire Young Conaway Stargatt & Taylor LLP 1000 West Street P.O. Box 391 Wilmington, DE 19899 RE: Hexion Specialty Chemicals, Inc., et al. v. Huntsman Corp. C.A. No. 3841-VCL Dear Counsel: I have reviewed and considered the papers submitted in connection with the motion to compel filed by plaintiff Hexion Specialty Chemicals, Inc. on July 31, 2008, directed at an email that defendant Huntsman Corp. inadvertently produced. Hexion seeks an order that the email be made available to it for use in discovery. Huntsman argues that the email is protected from disclosure by the attorney-client privilege.1 For the following reasons, the motion to compel is denied. The email at issue was sent on July 8, 2007, by a partner at Vinson & Elkins, Huntsman s outside counsel, to a partner at Shearman & Sterling, another of Huntsman s outside counsel, and to the General Counsel of Huntsman. Several other persons were added as recipients, including a Managing Director at Merrill Lynch & Co. Both law firms and Merrill Lynch were, at the time, actively involved in advising the Huntsman board of directors in connection with the then ongoing merger negotiations between Hexion and Huntsman. The email is entitled 1 Paragraph 16 of the confidentiality order governing the production of documents in this case contains a standard non-waiver and clawback provision that permits Huntsman to demand the return of the document that it says was mistakenly produced. The order further provides that the receiving party, here Hexion, may submit the document to the court for a determination of the claim of privilege. Hexion Specialty Chemicals, Inc., et al. v. Huntsman Corp. C.A. No. 3841-VCL August 12, 2008 Page 2 Thoughts and its content relates to strategies for making the financing covenants in the merger agreement more favorable to Huntsman. The email was distributed to two other Shearman & Sterling lawyers by the author. The Merrill Lynch executive forwarded the email to several other members of his team. The email is plainly subject to a valid claim of attorney-client privilege. It is a communication from a lawyer to the client and another lawyer representing the same client, made for the purpose of facilitating professional legal services. See Rule 502(b) of the Delaware Uniform Rules of Evidence. The disclosure of the email to the Merrill Lynch executive and members of his team did not destroy or constitute a waiver of the claim of privilege.2 As explained in the affidavit of the author of the email submitted in opposition to the motion, the Merrill Lynch executive was also working for Huntsman on the same transaction and had been an active participant in the review and drafting of the Merger Agreement particularly as it related to the financing covenants and working to create greater certainty that the Merger would close. 3 As he goes on to say, I was hoping to elicit any thoughts Merrill Lynch might have regarding the drafting of the Merger Agreement and I wanted to make sure that Merrill Lynch was up to speed on the legal issues we were considering particularly in light of the fact that certainty of closing was one of the key issues Huntsman s lawyers and bankers had been instructed by the Huntsman board to focus on. 4 As Chancellor Allen noted in Jedwab, [k]nowledgeable participants in [corporate] transactions would themselves regard disclosures to investment bankers in such circumstances as confidential and the law would, in my judgment, tend to validate that judgment. 5 Finally, the record does not support Hexion s strained argument that the content of the email shows that Huntsman is taking knowingly false positions in this litigation. I will not elaborate on this point because it is not appropriate to make any further disclosure of the content of the email. It suffices to say that there is nothing in the email that is necessarily inconsistent with the positions taken by Huntsman in the litigation. 2 Jedwab v. M.G.M. Grand Hotels, Inc., 1986 Del.Ch.LEXIS 383 (Del. Ch. Mar. 20, 1986); Cede Co. v. Joulé Inc., 2005 WL 736689 (Del. Ch. 2005). 3 Aff. of Jeffrey B. Floyd, Esquire, sworn August 5, 2008, at para. 7. 4 Id. 5 Jedwab, at *5. Hexion Specialty Chemicals, Inc., et al. v. Huntsman Corp. C.A. No. 3841-VCL August 12, 2008 Page 3 For all of these reasons, Hexion s motion to compel dated July 31, 2008 is DENIED. IT IS SO ORDERED. /s/ Stephen P. Lamb Vice Chancellor
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