Directors should remember that the attorney-client privilege and the confidentiality of “work product” prepared “in anticipation of litigation” do not automatically apply to protect from disclosure the minutes of board meetings or board committee meetings, especially if those documents are seen by the court as having been created in the ordinary course of the company’s business.
See, e.g., Brown v. American Partners Federal Credit Union, 645 S.E.2d 117, 540-41 (N.C. App. 2007; U.S. v. South Chicago Bank, 1998 WL 774001 (N.D. Ill.), at *8, citing U.S. v. Mass. Inst. of Tech., 957 F.Supp. 301, 305 (D.Mass.1997).
Neither can the privilege be invoked simply because the board furnished the minutes “to legal counsel ‘for review.’” In re ISN Software Corp. Appraisal Litigation, 2014 WL 1394362 (Del. Ch.), at *2 (characterizing this argument as “unpersuasive”).
Nor will the minutes’ notation that “counsel present at the meeting ‘updated the [Executive] Committee on the status of” litigation” suffice, where “[t]here is no detail whatever of the content of the status report [and t]he minutes themselves contain no legal advice, opinion, plan or strategy.” Nestle Co., Inc. v. A. Cherney & Sons, Inc., 1980 WL 30337 (D. Md.), at *5.
Similarly, “a simple statement in the Minutes that the Directors were briefed by an attorney or discussed a matter raised by an attorney, without more, is not protected by the attorney-client privilege.” Trollinger v. Tyson Foods, Inc., 2007 WL 951869 (E.D. Tenn.), at *2.
Not even the minutes of “special fraud committees. . . . created for the purpose of investigating fraud” are protected as work product, if the court finds “no evidence that their meetings were held for litigation purposes.” U.S. v. South Chicago Bank, supra, at *8.
However, if the minutes do reflect confidential consultations with counsel about specific matters, the company may be permitted to redact those portions as privileged. Powell v. Western Illinois Elec. Coop., 536 N.E. 2d 231, 235-36 (App Ct. Ill. 4th Dist. 1989); Welch v. Board of Directors of Wildwood Golf Club, 146 F.R.D. 131, 139 (W.D.Pa.1993) Eastern Technologies, Inc. v. Chem–Solv, Inc., 128 F.R.D. 74 (E.D.Pa.1989).
Can it be plausibly asserted that all of the minutes of a special litigation committee—for instance, one created to consider a demand made by a shareholder that the board initiate a lawsuit against one or more current or former directors or officers—are privileged, and also protected as work product?
Would such arguments be enhanced if counsel for the board, or for the committee, had been present for all of each of the committee’s meetings?
Would there be further support for protection of the minutes if a director who also served as counsel to the company had attended the relevant board or committee meeting? In that situation, would the extent of her participation, beyond her mere presence, make any difference?
Would it matter whether a director/attorney was an “inside” counsel (i.e., full-time, salaried officer of that corporation) with a position such the company’s General Counsel, or Vice President-Legal, rather than being an “outside” counsel at a private law firm?
Would it matter whether she had also served as, and created the minutes in the additional capacity of, Secretary of the Corporation, or of the committee?
Would the answers be different if the committee had been created to assess and respond to a shareholder derivative lawsuit already initiated in a court by a shareholder—for instance, if the committee was charged with determining whether this existing litigation was in the overall best interests of the company, or whether (as often occurs) the company should move for its dismissal?
Would the board be well-advised to spin off into a separate committee (and/or subcommittee), so as to protect minutes from disclosure, the responsibility for any detailed investigation and/or examination of issues likely to result in litigation?
Or are all of these simply “academic” questions, because board and committee minutes have been often carefully drafted to reveal a minimum of details of all discussions?
