## Facts

- In September 2011, Great Hill acquired Plimus, Inc. through a merger governed by Delaware law, with Plimus as the surviving corporation (later renamed BlueSnap, Inc.).
- In September 2012, the buyer sued the former stockholders and related parties, alleging fraudulent inducement and breaches of representations and warranties connected to the acquisition.
- During discovery, the buyer located on the surviving corporation’s computer systems pre-merger communications between Plimus and its counsel about negotiating the merger.
- For roughly a year after closing, the sellers did not retrieve, segregate, or remove those communications from the company’s systems.
- The merger agreement followed the default effects of Delaware merger law and did not expressly reserve to the sellers any control over Plimus’s pre-merger attorney-client communications.
- After learning the buyer had found the communications, the sellers asserted attorney-client privilege and claimed continuing control over the privilege for merger-negotiation advice.

## Issues

1. Whether, under 8 Del. C. § 259 and absent an express contractual provision, the target corporation’s pre-merger attorney-client privilege—including communications about negotiating the merger—passes to the surviving corporation.
2. Whether former stockholder-sellers may assert and control that privilege to block the surviving corporation’s access and use of the communications in post-closing litigation.

## Decision

- The Court of Chancery held that, by operation of 8 Del. C. § 259, all of the target corporation’s privileges, including the attorney-client privilege, transfer to the surviving corporation in a merger unless the parties agree otherwise.
- The court ruled that the transferred privilege includes pre-merger communications concerning the negotiation of the merger itself.
- Because the merger agreement contained no express carve-out reserving privilege to the sellers, the buyer (as controller of the surviving corporation) controlled the privilege and could use the communications in the litigation.
- The court rejected the sellers’ attempt to invoke privilege to prevent the buyer’s use of the documents found on the surviving corporation’s systems.

## Legal Principles

- Under 8 Del. C. § 259, a merger vests in the surviving corporation all property, rights, and privileges of the constituent corporations; the corporate attorney-client privilege is included in that statutory transfer.
- Control of a corporation’s attorney-client privilege follows corporate control; after a merger, the surviving corporation’s new management controls the privilege unless the merger agreement provides otherwise.
- Parties may allocate or reserve control over pre-closing privileged communications by explicit contractual language; absent such language, the default statutory rule applies.
- A seller’s failure to segregate or remove privileged deal communications from the target’s systems supports treating those materials as part of the transferred corporate records subject to the surviving corporation’s control.

## Conclusion

The court held that the target’s attorney-client privilege, including pre-merger communications about negotiating the merger, transferred to the surviving corporation under Delaware merger law because the parties did not expressly reserve that privilege to the sellers in the merger agreement.


Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 80 A.3d 155 (Del. Ch. 2013)