Wilimington, Del—After explicitly adopting the Garner doctrine, an exception to the attorney-client privilege, the Delaware Supreme Court affirmed an order that Wal-Mart provide a shareholder with internal documents concerning company executives' knowledge of an alleged bribery scheme. However, the July 23 decision, in Wal-Mart Stores Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, also required shareholder IBEW to return private documents that had been stolen from the company by a whistleblower.

The suit stemmed from a 2012 article in The New York Times, detailing Wal-Mart executives' inadequate response to an alleged bribery scheme by officers at its Mexico subsidiary. In anticipation of pursuing a derivative suit, the IBEW filed a claim under Del. Code § 220 and demanded internal documents related to the scheme. The Chancery Court of Delaware ordered Wal-Mart to disclose a wide range of documents, including communications between Wal-Mart executives and attorneys. In its decision, the chancery court relied in part on the Garner doctrine, an exception to the attorney-client privilege that arises when a corporation is accused of acting inimically to a shareholder’s interest.

Adoption of the Garner Doctrine

On appeal, Wal-Mart argued that the supreme court had never adopted the Garner doctrine in a plenary proceeding, much less a § 220 claim. The Delaware Supreme Court acknowledged that it had never explicitly adopted the Garner doctrine. However, after noting the doctrine's history, including previous chancery decisions that successfully relied on the doctrine in § 220 claims, the supreme court explicitly adopted Garner, holding it applicable in plenary suits and §220 actions. While the court also held that parties must meet the “necessary and essential” requirement to produce documents under §220 before consideration of the Garner doctrine and its “good cause” standard, it found that the chancery court properly made those separate determinations in the IBEW suit.

Return of Certain Whistleblower Documents

The decision also upheld the chancery's court’s order requiring IBEW return whistleblower documents that had not been published by The Times or a subsequent federal congressional investigation. According to the supreme court, the documents, which Wal-Mart claimed had been stolen by a former employee, remained protected to the extent that they had not become available to the public. However, the court noted that the documents could later be found within the wide range of information Wal-Mart was required to disclose under the § 220 order.

Wal-Mart faces derivative suits throughout the country based on the bribery allegations, including federal suits in Texas and Arkansas, as well as state-law claims in Delaware.

Click here to view oral arguments before the Delaware Supreme Court.

Click here to read the full opinion.

An attorney in Florida’s record-setting tobacco case said the jury’s $23.6 billion punitive award was a response to tobacco companies’ apparent indifference to claims against them, and he hailed the verdict as an "opportunity for the tobacco industry to reconsider its conduct."

Christopher Chestnut, part of the plaintiff's legal team in Cynthia Robinson v. R.J. Reynolds Tobacco, described the award, the largest to-date in Florida's Engle progeny cases, as a landmark win in tobacco litigation. "It changes the whole landscape," Chestnut said.

On July 18, an Escambia County, Florida jury awarded more than $23.6 billion in punitive damages to the widow and son of Michael Johnson Sr., a smoker who died from lung cancer in 1996. The suit had originally been part of Florida’s Engle class action claim against tobacco industry defendants. However, an award for plaintiffs was vacated and the class ultimately decertified, exposing tobacco defendants to potential liability in thousands of individual claims. Tobacco companies have faced mixed results in the Engle progeny cases decided so far. However, punitive awards in earlier Engle progeny cases have generally run in the millions of dollars. Chestnut said those earlier awards, and the indifference by R.J. Reynolds to those damages, may have contributed to the award in Robinson. He pointed to defense counsel’s seemingly nonchalant reference during closing arguments to the more than $100 million R.J. Reynolds has paid in prior Engle progeny cases. "Those awards didn’t get their attention," Chestnut said. "The $23 billion got their attention."

Chestnut said he believed the evidence that most resonated with jurors was video of a 1994 congressional hearing in which tobacco industry leaders testified that cigarettes were not addictive. Chestnut said the testimony, contrasted with evidence of tobacco industry internal documents acknowledging the addictiveness of nicotine, established R.J. Reynolds’s complicity to cover up the dangers of smoking and supported the large punitive award. “We called them liars and called their practice for what it was: lies and greed,” Chestnut said.

Although some legal analysts, including loss-of-life compensation expert Ken Feinberg, believe the punitive award won’t be upheld, Chestnut said he believes Robinson may establish a new trend for larger verdicts. “This is an opportunity for meaningful change” in tobacco litigation, Chestnut said. “They called this a ‘runaway jury,’” Chestnut said. “They are a runaway company…. I hope this award resonates” going forward.

Atlantic County, NJ–A New Jersey Superior Court judge upheld an $11.1 million jury verdict awarded last year in a bellwether product liability case against transvaginal mesh manufacturer Ethicon Endo-Surgery Inc.

In Linda Gross v. Ethicon, Judge Carol Higbee of the Atlantic County Superior Court denied Ethicon’s motion for a new trial and a judgment notwithstanding the verdict, ruling that "strong evidence" supported Gross’s product liability claims against Ethicon's Prolift, a device use to treat vaginal prolapse. Gross argued that she underwent multiple surgeries to remove the device after it hardened and eroded through her vaginal wall. She also claimed that long-term damage caused by the Prolift left her unable to sit for long periods of time without pain. The jury awarded Gross $3.35 million in compensatory damages and $7.76 million in punitive damages after finding Ethicon, a subsidiary of Johnson & Johnson, Inc., misrepresented the Prolift to Gross and failed to adequately warn her surgeon of its risks.