## Facts

- 3Com Corporation agreed to be acquired under a merger agreement with Diamond II Holdings, Inc., a Bain Capital acquisition entity.
- Huawei Technologies Co. Ltd. was a proposed co-investor in the post-merger entity and was involved in communications relevant to privilege disputes.
- The transaction required CFIUS clearance due to foreign-ownership issues; after CFIUS indicated it would not recommend approval, the parties withdrew the notice and terminated the merger.
- 3Com sued for payment of a $66 million contractual termination fee and moved for summary judgment.
- Diamond II sought discovery to oppose summary judgment; the court permitted discovery and then resolved cross-motions to compel addressing attorney-client privilege, work product, common interest, and privilege choice of law.

## Issues

1. Whether Delaware or Massachusetts privilege law governed transactional communications connected to the merger.
2. Whether 3Com waived attorney-client privilege by including its investment banker (Goldman Sachs) on communications with counsel.
3. Whether emails among investment bankers without lawyers as recipients could still be privileged.
4. Whether Diamond II and Huawei could withhold communications under the common-interest doctrine, and whether asserted work-product protections were adequately supported.

## Decision

- The court applied Delaware privilege law under a Restatement-based “most significant relationship” analysis, giving weight to the merger agreement’s Delaware choice-of-law and Delaware forum provisions.
- The court held that including 3Com’s financial advisor on otherwise privileged attorney-client communications in the M&A context did not, by itself, waive privilege.
- The court declined to adopt a categorical rule that banker-only communications were non-privileged; it required a document-by-document assessment where banker-only messages might reflect or relay legal advice within a confidential advisory group.
- The court scrutinized common-interest and work-product assertions and required narrow, well-supported showings; where support was inadequate, the court ordered production or further justification.

## Legal Principles

- Privilege choice of law may be governed by a “most significant relationship” test; contractual Delaware choice-of-law and forum-selection provisions strongly support applying Delaware privilege law to related communications.
- Disclosure of privileged communications to a client’s financial advisor in a corporate transaction does not necessarily waive attorney-client privilege when the advisor’s involvement is tied to obtaining or implementing legal advice and confidentiality is maintained.
- Attorney-client privilege is not defeated solely because a communication lacks a lawyer recipient; internal dissemination within a client’s confidential advisory team may remain privileged if it conveys or implements counsel’s legal advice and the client has not waived the privilege.
- Common-interest protection applies only to communications furthering a shared legal interest, not merely aligned business objectives; assertions must be specific to each communication.
- Work-product protection turns on whether materials were prepared in anticipation of litigation and may be lost or limited if disclosure is inconsistent with the protection’s purpose; conclusory logs or generalized claims are insufficient.

## Conclusion

The court resolved discovery disputes by applying Delaware privilege law, rejecting automatic waiver from banker participation, requiring document-specific review of banker-only communications, and demanding targeted support for common-interest and work-product claims while ordering production or supplementation where protections were not adequately shown.


3Com Corp. v. Diamond II Hldgs., Inc., No. 3933-VCN, 2010 WL 2280734 (Del. Ch. May 31, 2010)