In a suit brought by Hexion and its affiliates (together, “Hexion”) seeking a declaratory judgment relating to a proposed merger between Hexion and Huntsman, Hexion moved to compel the production of certain documents prepared by Merrill Lynch, Huntsman’s financial advisor and litigation consultant. Merrill Lynch provided financial advice to Huntsman in connection with the proposed merger between Hexion and Huntsman, and continued to do so after litigation commenced. After litigation commenced, Huntsman also retained the same group of Merrill Lynch employees to provide litigation consulting advice. Huntsman and Merrill Lynch then refused to produce documents prepared after the commencement of litigation, on the grounds that Rule 26 (b) (4)(B) (governing non-testifying consulting experts) and the work product doctrine protected those documents from disclosure. The Court found, however, that because Merrill Lynch did not form separate and distinct financial advisory and litigation consulting teams, neither Rule 26 (b)(4)(B) nor the work product doctrine applied. In so finding, the Court held that Huntsman had sufficient time to engage an independent financial advisor as a litigation consultant and “if Huntsman was actually interested in having Merrill Lynch provide litigation services to its attorneys (instead of cloaking its financial services from discovery), Huntsman had both the time and the occasion to ask Merrill Lynch to form a separate team of litigation consultants.” The Court reasoned that had Merrill Lynch formed separate teams it may have been able to maintain adequate internal controls to prevent the fact witnesses serving on the investment banking team from gaining knowledge of the litigation consultant team’s work. But where no definitive line had been drawn between the teams to ensure there was no sharing of information between the teams, the Court held that Huntsman should not be permitted to throw a cloak of secrecy over Merrill Lynch’s advisory activities by the simple expediency of purporting to hire the same team of Merrill Lynch employees as its counsel’s litigation consultants. Thus, Huntsman’s failure to make any meaningful effort to distinguish between Merrill Lynch’s dual roles precluded it from invoking the protections from discovery afforded non-testifying litigation consultants under Rule 26(b)(4)(B). The Court also reviewed in camera several of the disputed Merrill Lynch documents and concluded that they represented financial, and not litigation, advice. Finally, the Court considered Huntsman’s additional arguments that the disputed documents were protected by the attorney-client privilege and/or the business strategies immunity. Holding that the documents presented to the Court in camera were protected by neither, the Court ordered the immediate production of those documents, and the prompt production of a privilege log so that those claims could be properly evaluated as to the other withheld Merrill Lynch documents.
The full opinion is available here.