IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
RICHARD F. BURKHART, WILLIAM E. ) KELLY, RICHARD S. LAVERY, ) THOMAS R. PRATT, and GERALD ) GREEN, individually and on behalf of all ) others similarly situated, ) ) Plaintiffs, ) ) v. ) C.A. No. 2018-0691-NAC ) GENWORTH FINANCIAL, INC., ) GENWORTH HOLDINGS, INC., ) GENWORTH NORTH AMERICA ) CORPORATION, GENWORTH ) FINANCIAL INTERNATIONAL ) HOLDINGS, LLC, and GENWORTH ) LIFE INSURANCE COMPANY, ) ) Defendants. )
MEMORANDUM OPINION
Date Submitted: June 18, 2024 Date Decided: August 21, 2024
Peter B. Andrews, Craig J. Springer, David M. Sborz, ANDREWS & SPRINGER LLC, Wilmington, Delaware; Edward F. Haber, Michelle H. Blauner, Ian J. McLoughlin, Patrick J. Vallely, SHAPIRO HABER & URMY LLP, Boston, Massachusetts; Counsel for Plaintiffs Richard R. Burkhart, William E. Kelly, Richard S. Lavery, Thomas R. Pratt, and Gerald Green.
Srinivas M. Raju, Elizabeth J. Freud, Daniel A. Dreisbach, Susan Hannigan Cohen, Kevin M. Gallagher, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Reid L. Ashinoff, Kenneth J. Pfaehler, T. Carter White, DENTONS US LLP, New York, New York; John C. Hueston, Marshall A. Camp, Padraic Foran, Zachary Murray, HUESTON HENNIGAN LLP, Los Angeles, California; Counsel for the Defendants Genworth Financial Inc., Genworth Holdings, Inc., Genworth North America Corporation, Genworth Financial International Holdings, LLC, and Genworth Life Insurance Company.
COOK, V.C. This decision resolves the defendants’ motion to compel (the “Motion”) as it
relates to the production of two categories of documents: (1) a litigation funding
agreement and (2) unredacted fee agreements. The plaintiffs’ arguments as to the
latter are wholly dependent on the success of their arguments as to the former.
As to the former, the plaintiffs raise two objections to the production of the
funding agreement—relevance and the work product doctrine. Delaware state courts
have addressed the production of litigation funding agreements and related
communications on several occasions. Three decisions have required production of
the funding agreements but permitted limited redactions on work product grounds.
But this Court’s most recent decision to address the issue seems to have rejected the
general applicability of the work product doctrine to litigation funding agreements.
And in another decision, this Court ordered production of litigation funding
communications, notwithstanding objections on work product grounds. None of these
cases, however, arise in the class action context.
As explained below, I find the litigation funding agreement relevant for two
reasons. First, the class action context and specific aspects of this litigation give rise
to several unique concerns, including the potential for class counsel to face conflicts
of interest and for the third-party funders to exercise improper control over the
litigation. These concerns may foreseeably bear on my decision as to the pending
motion for class certification. Second, the parties to the litigation funding agreement
set forth their collective “expectation” that the agreement would be disclosed to the
Court during litigation in advance of class certification. I read this “expectation” as
1 an acknowledgment of relevance. I conclude further that the plaintiffs’ three-
sentence argument as to work product does not satisfy their burden of showing the
funding agreement may be withheld on that basis. Accordingly, I grant the Motion
as to the funding agreement. And the plaintiffs’ only argument as to the fee
agreements rises and falls with their arguments as to the funding agreement.
I. BACKGROUND
In March 2023, the defendants Genworth Financial, Inc., Genworth Holdings,
Inc., Genworth North America Corp., Genworth Financial International Holdings,
LLC, and Genworth Life Insurance Co. (together, “Defendants”) served requests for
production on the named plaintiffs.1 The named plaintiffs are Richard F. Burkhart,
William E. Kelly, Richard S. Lavery, Thomas R. Pratt, and Gerald Green (together,
“Plaintiffs”). In their requests for production, Defendants sought production of the
fee agreements between class counsel and Plaintiffs (the “Contingent Fee
Agreements”). Plaintiffs produced the Contingent Fee Agreements in August 2023,
but they did so with heavy redactions to the part of the agreement discussing the
actual fee arrangement between Plaintiffs and putative class counsel (the law firm of
Shapiro Haber & Urmy LLP or “SHU”). The redactions were so extensive that, under
1 Burkhart v. Genworth Fin. Inc., C.A. No. 2018-0691-NAC (“Dkt.”) 318, Pls.’ Opp’n to
Defs.’ Mot. to Compel (“Pls.’ AB”) Ex. 1.
2 the heading “LEGAL FEES AND EXPENSES[,]” only a single sentence is
unredacted.2
Defendants deposed Plaintiffs between August and November of 2023. Only
after these depositions does it seem that Plaintiffs revealed the existence of a
litigation funding agreement (the “Funding Agreement”) with certain unidentified
“Litigation Funders” (the “Funders”).3 To date, Plaintiffs have refused to produce any
copy of the Funding Agreement or to disclose even the Funders’ identities.
Plaintiffs moved for class certification on January 12, 2024. In their motion
papers, they argue “[t]here are no conflicts between the named Plaintiffs and the
members of the Class[,]”4 and they and their counsel satisfy all the respective factors
for appointment as class representatives and class counsel.5 On March 20, 2024, two
days before Plaintiffs were due to file their reply brief in support of their motion for
class certification, Plaintiffs produced a new version of the Contingent Fee
Agreements—this time, with fewer redactions. In the most recent iteration, the legal
fees and expenses section describes part of the Funding Agreement (the “Funding
Agreement Description”). It provides the following:
[REDACTED] have agreed to pay the reasonable legal fees and expenses of the Firm and its local Delaware local [sic] counsel in prosecuting the
2 Dkt. 310, Aff. of T. Carter White in Supp. of Defs.’ Mot. to Compel (“White Aff.”) Exs.
1–5.
3 White Aff. Ex. 6 at 2.
4 Dkt. 291, Opening Br. in Support of Pls.’ Mot. for Class Certification at 42.
5 Id. at 40–57; see also id. at 6 (asserting “[P]laintiffs should be appointed as class
representatives” and “[SHU] should be appointed as Class Counsel”).
3 Class Action, up to a total amount of [REDACTED] plus the reasonable fees and expenses of any experts whom SHU may reasonably retain to assist it in the prosecution of the Class Action. The [REDACTED] understand and have agreed in writing that notwithstanding such payments, they will have no right to exercise any control over either the manner in which the Class Action is prosected or any negotiations that may subsequently occur in an attempt to settle the Class Action. To the contrary, the [REDACTED] have agreed that only you and any other class representatives who may be appointed by the Court will have the right to direct the actions of SHU and its local counsel with respect to the manner in which the Class Action is prosecuted or resolved.6
To date, Plaintiffs refuse to produce the Contingent Fee Agreement without
redactions. Less than one month after Plaintiffs produced the second version of the
Contingent Fee Agreement, Defendants filed the Motion. They seek to compel
production of (1) the Funding Agreement and (2) the unredacted Contingent Fee
Agreements.7
I heard oral argument on the Motion on June 13, 2024. After oral argument, I
ordered Plaintiffs’ counsel to submit the withheld documents for in camera review.
II. LEGAL ANALYSIS
Court of Chancery Rule 26(b)(1) permits discovery “‘regarding any non-
privileged matter that is relevant to any party’s claim or defense and proportional to
the needs of the case.’ When a party . . . withholds discovery on the ground of
6 White Aff. Exs. 7–11.
7 Defendants also seek to compel production of documents and further deposition testimony surrounding two other categories. I defer ruling on those other categories, pending further briefing. I will issue a letter concerning supplemental briefing separately.
4 privilege, that party bears the burden ‘of establishing each of [the applicable
privilege’s] elements.’”8
Defendants seek production of the entire Funding Agreement. They argue that
the presence of litigation funders creates the potential for conflicts of interest that
may incentivize counsel to prioritize the interests of the Funders over those of the
class. And the potential for such conflicts makes the Funders’ identity and the
character of its interest in the litigation relevant and necessary to test whether
Plaintiffs are “truly independent from the [F]under[s’] direction and control . . . .”9
Plaintiffs counter with two arguments—relevance and the work product doctrine.
A. Relevance
“Information sought in discovery is considered relevant ‘if there is any
possibility that the information sought may be relevant to the subject matter of the
action.’”10
[T]he requirement of relevancy must be construed liberally. . . . [T]he spirit of Rule 26(b) calls for all relevant information, however remote, to be brought out for inspection not only by the opposing party but also for the benefit of the Court. . . . Thus, discovery should ordinarily be allowed under the concept of relevancy unless it is clear that the
8 Pearl City Elevator, Inc. v. Gieseke, 2020 WL 5640268, at *2 (Del. Ch. Sept.
21, 2020) (alternation in original).
9 Dkt. 309, Defs.’ Mot. to Compel at 8.
10 In re Appraisal of Dole Food Co., Inc., 114 A.3d 541, 548 (Del. Ch. 2014) (quoting
Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Stauffer Chem. Co., 1990 WL 177572, at *3 (Del. Super. Nov. 9, 1990)).
5 information sought can have no possible bearing upon the subject matter of the action.11
Two factors lead me to conclude that the Funding Agreement is relevant: the
class action context in which this action arises and the express terms of the Funding
Agreement itself.
1. The Class Action Context
First, the present matter arises from the class action context. Viewed in this
context, class certification under Court of Chancery Rule 23 provides a clear
connection between the pertinent legal issues in this action and the Funding
Agreement.
Although it is ultimately “a matter of this Court’s discretion[,]” when
determining whether to certify a class, the “Court must undertake a ‘rigorous
analysis’ . . . and ‘make an explicit determination on the record of the propriety of the
class action according to the requisites of Rule 23(a) and (b).’”12 Among other things,
this requires the Court to assess whether the named plaintiffs retained “competent
and experienced counsel to act on behalf of the class.”13 Rule 23(d) also sets out an
11 Id. (quoting Boxer v. Husky Oil Co., 1981 WL 15479, at *2 (Del. Ch. Nov. 9, 1981)).
12 Buttonwood Tree Value P’rs., L.P. v. R. L. Polk & Co., 2022 WL 2255258, at *3 (Del.
Ch. June 23, 2022) (footnote omitted) (discussing adequacy of class representative under Rule 23(a)(4)).
13 Id. at *10 (quoting In re Fuqua Indus., Inc. S’holder Litig., 752 A.2d 126, 127 (Del.
Ch. 1999)).
6 independent requirement that “[c]lass counsel must fairly and adequately represent
the interests of the class.”14
If it is not already clear, this Court takes its thorough evaluation of the Rule 23
requirements seriously. Indeed, “[t]he adequacy of the class representative”
requirement set out in Rule 23(a)(4) brings with it “a constitutional dimension. The
Due Process Clause of the United States Constitution requires ‘that the named
plaintiff at all times adequately represent the interests of the absent class
members.’”15
As it relates to these considerations, I believe there may be legitimate concerns
that counsel could face a conflict of interest. There are many instances where a
funder’s interests might diverge from those of a claim holder.16 But the class action
context seems especially ripe for a third-party funder to exercise improper control
over the litigation, at least relative to the heightened degree of oversight that might
14 Ct. Ch. R. 23(d).
15 Prezant v. De Angelis, 636 A.2d 915, 923 (Del. 1994) (quoting Phillips Petroleum Co.
v. Shutts, 472 U.S. 797, 812 (1985)); see also Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery § 12.02[b][5], at 12- 16 to -17 (2022).
16 J. Maria Glover, Alternative Litigation Finance and the Limits of the Work-Product
Doctrine, 12 N.Y.U. J. L. & Bus. 911, 935 (2016) (“[O]ne could imagine any number of legitimate concerns about the ways in which litigation funding could alter the incentives of plaintiffs’ counsel and potentially create conflicts between its loyalty to the class and its contractual obligations to the litigation funder.”); Maya Steinitz, Incorporating Legal Claims, 90 Notre Dame L. Rev. 1155, 1168 (2015) (“[T]he introduction of a financier into the attorney- client relationship can produce conflicts or reinforce existing ones.”).
7 tend to accompany an ordinary attorney-client relationship.17 And “[t]his concern is
even more problematic[,]” as here, where class counsel “contract[s] directly with a
funder for financial resources” since, in doing so, counsel may take on duties to the
funder that are separate and apart from counsel’s “professional duties to the class.”18
Given these clear concerns, it seems relevant to determine whether, or the
extent to which, diverging interests may impact counsel’s ability or willingness to
adequately represent the class.
Such questions seem almost inherently to implicate the Funders’ identities and
the extent of their control (whether direct or indirect) over the litigation. These are
questions the Funding Agreement can help answer.
Plaintiffs argue the Funders have no control over the litigation. They point to
the previously redacted Funding Agreement Description in the Contingent Fee
Agreements and suggest the language contained therein, by itself, is sufficient to
assuage my concerns. But not all control takes an overt form that is set forth
expressly in the terms of a contract. Indeed, “[f]unders . . . may engage in less obvious
17 See Aaseesh P. Polavarapu, Discovering Third-Party Funding in Class Actions: A
Proposal for in Camera Review, 165 U. Pa. L. Rev. Online 215, 222 (2017) [hereinafter “Funding Class Actions”] (Class counsel often is afforded wide latitude to “exercise[] nearly plenary control over all important decisions in the lawsuit . . . .” (quoting Jonathan R. Macey & Geoffrey P. Miller, The Plaintiffs’ Attorney’s Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U. Chi. L. Rev. 1, 3 (1991))); see also In re Winchell’s Donut Houses, L.P. Sec. Litig., 1988 WL 135503, at *2 (Del. Ch. Dec. 12, 1988) (“[T]here are aspects of a class action that[ ]from the ‘client’s’ point of view-make that representation quite different. The class member cannot discharge his lawyer as can the typical ‘client’ and, in (b)(1) or (b)(2) actions, cannot opt out of the class action (which would accomplish the same result).”).
18 Funding Class Actions at 222.
8 forms of control.”19 The potential for funders to exercise discrete control over
litigation might arise in a variety of ways that I need not delve into here.20 Suffice it
to say that the mere inclusion of these statements in the Contingent Fee Agreements,
to which the Funders themselves are not parties, does little to relieve my concerns over
their potential to exercise control over the litigation in a manner that may give rise
to a conflict.21
19 Id. at 221.
20 See id. (“[R]epeated interactions between a funder and counsel may lead to a working relationship, and as a result, the funder may be able to exercise significant influence over counsel’s decision[-]making. A funder may also threaten to withdraw financing unless the litigation proceeds according to its own strategic preferences.” (footnotes omitted)); Steinitz, supra, at 1168 (“In addition to conflicts that are similar to those that exist between contingency fee lawyers and their clients—such as incentives to settle early in order to maximize profits across a portfolio rather than in a particular case, incentives to prioritize reputation over monetary relief, and incentives to prioritize monetary relief over nonmonetary relief—interesting examples of conflicts unique to the funder-client relationship include those that may arise if a funder decides to securitize its pool of litigations or to invest on both sides of the ‘v.’ Conflict concerns are often also concerns about control. Instead of overt control, like formal settlement authority or the right to dictate choice of counsel, conflicts can generate hidden forms of control. For example, any repeat-play relationship between funder and the litigation counsel gives funder informal but significant influence over the conduct of the case.” (footnotes omitted)).
21 To the contrary, the Funding Agreement Description in the Contingent Fee Agreements suggests other potential concerns. For example, based on the language used and the timing of signatures on the respective agreements, I have some questions as to whether the named Plaintiffs received or were aware of the terms of the Funding Agreement, either before or after the named Plaintiffs executed the Contingent Fee Agreements. Compare Log 6, Log 9, and White Aff. Exs. 8–10, with Log 52. My concerns are likely further colored, in part, by Judge Rakoff’s decision denying class certification in Gordon v. Sonar Cap. Mgmt. LLC, 92 F. Supp. 3d 193 (S.D.N.Y. 2015), which addressed SHU’s failure to disclose fee- arrangement information about which the Court had inquired. Id. at 199 (explaining SHU failed to “reveal[] the existence of a” fee-sharing arrangement with another attorney “at the hearing on appointment of lead plaintiff and lead counsel, even though the Court inquired into [SHU]’s separate fee sharing agreement with another ‘referring counsel’”).
9 2. The “Expectation” Clause
The class action context might itself suggest the Funding Agreement is
relevant to the matter at hand. But that is not the only ground on which I base my
determination of relevance. The express terms of the Funding Agreement also set
forth its parties’ clear “expectation[s]” that it, or the arrangement set forth within,
will be disclosed in some fashion during litigation.
In the final paragraph of what, in substance, is a six-paragraph agreement, the
Funding Agreement expressly contemplates its own disclosure. It provides: “It is our
expectation that this arrangement will be disclosed to the court presiding over the
Class Action at or before the time that the court is requested to certify a class in the
case.”22
I have difficulty thinking of a more direct acknowledgement of relevance than
the Funding Agreement’s parties stating their “expectation[s]” that the document or
its terms will be disclosed during the course of litigation—at the class certification
stage no less.23 It is as if they foresaw the potential concern over conflicts and tried
to get ahead of the issue. Here, and consistent with the broad treatment Delaware
22 Log 52.
23 I acknowledge there may be general concerns that requiring production of litigation
funding agreements could have a chilling effect on funders’ willingness to provide the resources needed to alleviate access-to-justice problems caused by the often-substantial cost of litigation. See, e.g., Funding Class Actions at 230–31. Here, that concern would seem misplaced. The parties to the Funding Agreement expressly stated their expectation that the agreement or its terms would be disclosed in some fashion during litigation. This is perhaps unsurprising since the Funders do not seem to be entities ordinarily involved in litigation funding. Instead, they appear to be competitors financing litigation against a market peer.
10 courts afford determinations of relevance, I conclude the Funding Agreement is
relevant.
Again, this conclusion is based in part on the nature of this action, the issues
tending to arise in the class action context, and the admission of relevance set forth
in the express terms of the Funding Agreement.24
B. Work Product
Plaintiffs assert the Funding Agreement is protected by the work product
doctrine. “The traditional work product doctrine has been codified in Chancery Court
Rule 26(b)(3), and generally bars the discovery of materials created in anticipation of
litigation or for trial preparation. But this bar is not an ‘impenetrable barrier.’”25
The burden to show withheld documents are privileged rests on the
withholding party.26 Here, that burden falls to Plaintiffs. Excluding two quotes,
24 To the extent Plaintiffs suggest the Funders’ identities are not relevant, I disagree.
In addition to being plainly relevant for the reasons discussed above, I take note that some forums even have standing orders requiring that a party that has made funding arrangements with a third-party funder file a statement containing the “identity” of the funder, among other things. See Standing Order Regarding Third-Party Litigation Funding Arrangements (D. Del. April 18, 2022), https://www.ded.uscourts.gov/sites/ded/files/Standing%20Order%20Regarding%20Third- Party%20Litigation%20Funding.pdf. Still other courts have modified their local civil rules to require similarly. See Amendment of Local Civil Rules (D.N.J. June 21, 2021), https://www.njd.uscourts.gov/sites/njd/files/Order7.1.1%28signed%29.pdf.
25 Saito v. McKesson HBOC, Inc., 2002 WL 31657622, at *3 (Del. Ch. Nov. 13, 2002)
(footnote omitted).
26 Rembrandt Techs., L.P. v. Harris Corp., 2009 WL 402332, at *5 (Del. Super. Feb.
12, 2009) (“The party asserting a privilege bears the burden of establishing that documents or communications are, in fact, and as a matter of law, protected by privilege. Therefore, a party who withholds ‘information otherwise discoverable . . . by claiming that it is privileged or subject to protection as trial preparation material . . . shall make the claim expressly and
11 Plaintiffs dedicate a hardly exhaustive three sentences of their opposition brief to
showing the Funding Agreement is protected work product.27 The last of the three
conclusory sentences also includes the full extent of Plaintiffs’ argument as to the
Contingent Fee Agreement. Plaintiffs’ complete argument on privilege is set forth as
follows:
It is well established under Delaware law that litigation funding agreements and related documents are not discoverable. They are protected work product because they are prepared in anticipation of litigation and reflect litigation strategy. This Court addressed this issue in Carlyle Investment Management, LLC v. Moonmouth Co. S.A., explaining: “Overall, it appears that the [litigation funding documents] were prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representative. . . . The policies underlying the work product doctrine . . . favor a finding of protection.”[] Similarly, in Charge Injection Technologies, Inc. v. E.I. Dupont De Nemours & Co., the court held: “redacted payment terms in the Financing Agreement are entitled to work product protection . . . .”[] As such, Plaintiffs’ redactions to their [Contingent Fee Agreements] to litigation funding are entirely appropriate, as is Plaintiffs’ objection to the production of the [Funding Agreement].28
But contrary to Plaintiffs’ assertion, it is not “well established” that, under
Delaware law, “litigation funding agreements . . . are not discoverable.” In fact, the
courts in both Carlyle and Charge Injection had ordered production of redacted
shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.’” (ellipses in original) (footnote omitted)).
27 See Pls.’ AB at 5–6.
28 Id. (ellipses in original) (non-substantive footnotes omitted).
12 versions of the respective funding agreements—which the parties had produced.29 So
when rendering the decisions that Plaintiffs quote from, the courts were only ruling
on whether the few remaining redactions were protected by the work product
doctrine.30 Consistent with these first two Delaware decisions on the issue, at least
one other Delaware state court decision required production of a funding agreement
with limited redactions when facing similar issues.31 Still another has granted a
motion to compel production of “withheld litigation funding communications,” due to
the plaintiff’s failure to satisfy the burden to show the communications were entitled
to work product protection.32
These decisions alone show that Plaintiffs do not meet their burden since
Plaintiffs’ argument turns entirely on its position that it is “well established” that
funding agreements are not subject to discovery and thus the Funding Agreement
29 See Carlyle Inv. Mgmt., LLC v. Moonmouth Co. S.A., C.A. No. 7841-VCP, at 25–29
(Del. Ch. Oct. 20, 2014) (TRANSCRIPT); Carlyle Inv. Mgmt. LLC v. Moonmouth Co. S.A., 2015 WL 778846, at *2 (Del. Ch. Feb. 24, 2015) (The defendants “submitted the required compliance statement[,]” according to which, the “[d]efendants produced: . . . a redacted copy of the [f]unding [a]greement with a redaction log . . . .”); Charge Injection Techs., Inc. v. E.I. DuPont De Nemours & Co., 2015 WL 1540520, at *2–3 (Del. Super. Mar. 31, 2015) (“The Court ordered [the plaintiff] to produce the redacted version of the [f]inancing [a]greement and its privilege log” and the plaintiff “produced the redacted version” of the agreement.).
30 Indeed, even the quotation Plaintiffs extract from Charge Injection makes it apparent that the court’s decision was cabined only to address, at most, certain redacted terms of the already-produced funding agreement.
31 Elenza, Inc. v. Alcon Labratories Hldg. Corp., C.A. No. N14C-03-185-CCLD (Del.
Super. June 14, 2016) (ORDER); Elenza, Inc. v. Alcon Labratories Hldg. Corp., C.A. No. N14C-03-185-CCLD, at 111–13 (Del. Super. May 11, 2016) (TRANSCRIPT).
Cannon v. Romeo Sys., Inc., C.A. No. 2021-0171-PAF (Del. Ch. Apr. 10, 2023) 32
(ORDER).
13 here is not discoverable.33 Further still, Plaintiffs make no mention of the “because
of litigation” test that our courts tend to use in assessing the applicability of the work
product doctrine. But this was our courts’ central focus in both Carlyle and Charge
Injection.
Indeed, in what I believe to be this Court’s most recent decision on the
applicability of the work product doctrine to funding agreements, Vice Chancellor
Laster—while recognizing the doctrine’s applicability to diligence-related
communications between party and funder—seems generally to have rejected the
doctrine’s applicability to the terms of a funding agreement.34 There, like here, the
parties did not raise the “because of litigation” test in the briefing.
For the foregoing reasons, I grant the Motion as to the complete, unredacted
Funding Agreement.35
33 Even if it were true (which Plaintiffs do not show) that Delaware courts are generally averse to compelling production of funding agreements, Plaintiffs do not show why the Funding Agreement at issue here should receive the same or similar treatment that they assert our courts have afforded the others. Only once in their entire argument do Plaintiffs actually refer to the Funding Agreement at issue in this action. The other references are to “funding agreements” generally.
34 See In re Côte d’Azur Estate Corp., C.A. No. 2017-0290-JTL, at 57–61 (Del. Ch. Dec.
8, 2022) (TRANSCRIPT) (“I recognize that in Carlyle, Vice Chancellor Parsons stated that the terms of the final agreement, such as the financing premium or acceptable settlement conditions, could reflect an analysis of the merits of the case. I agree with that at a high level; it could. But I think it will rarely do so in a manner that actually implicates any type of privilege.”).
35 Separately, I note that, having conducted an in camera review of the Funding Agreement, its terms seem materially distinct from those that were at issue in Carlyle and Charge Injection. Here, the Funding Agreement does not reflect any opinion work product, risk analyses, or other meaningful reference to strategy, mental impressions, or the lawsuit’s merits. I am confident that, in compelling production of the Funding Agreement, I am not
14 Plaintiffs’ half-sentence argument for not producing fully unredacted
Contingent Fee Agreements piggybacks entirely off their arguments as to the
Funding Agreement.36 And since Plaintiffs’ argument rises and falls with the success
of the Funding Agreement arguments, I also grant the Motion as to the complete,
unredacted Contingent Fee Agreements.
III. CONCLUSION
For the foregoing reasons, the Motion is granted as to the Funding Agreement
and Contingent Fee Agreements. Plaintiffs shall deliver complete and fully
unredacted copies of the Funding Agreement and the Contingent Fee Agreements to
Defendants within seven days.
requiring Plaintiffs to disclose meaningful opinion work product. I am also confident the parties to the Funding Agreement did not believe they included confidential or privileged material in the document. This conclusion is reinforced by the parties’ express anticipation that the Funding Agreement would be disclosed to the Court in connection with class certification.
36 Pls.’ AB at 5–6; see also Grunstein v. Silva, 2010 WL 1531618, at *2 (Del. Ch. Apr.
13, 2010) (“Communications regarding fee arrangements are typically discoverable because fee arrangements are considered incidental to the attorney-client relationship and do not usually involve the disclosure of confidential communications arising in the context of the professional relationship.”); Green v. ConAgra Poultry Co., 2007 WL 2319146, at *7 (Del. Super. July 11, 2007) (discussing Third Circuit precedent providing that, “[a]bsent unusual circumstances, the attorney-client privilege ‘does not shield the fact of retention, the identity of clients, and fee arrangements’”), aff’d, 954 A.2d 909 (Del. 2008). The dependent nature of Plaintiffs’ argument as to the Contingent Fee Agreements seems to follow logically from the fact that the redacted parts of those agreements do not meaningfully disclose anything the Funding Agreement does not already disclose.