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What Does Delaware’s Wal-Mart Decision Mean for Attorney-Client Privilege and Internal Investigations?

The Delaware Supreme Court recently came to a decision in Wal-Mart Stores Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW to uphold the order given by the Delaware Court of Chancery to require Wal-Mart to give the plaintiff (a shareholder) documents relating to the company’s internal investigation of allegations made by the plaintiff, including documents protected by attorney-client privilege.

The allegations made by the plaintiff maintain that Wal-Mart attempted to cover up an internal investigation into the bribery of various Mexican officials. 

There are a couple main reasons why this case is significant in terms of its impact on internal investigations and the attorney-client privilege:

  1. It officially embraced the Garner doctrine, a doctrine that allows a corporation’s stockholders to bypass the organization’s attorney-client privilege when seeking to prove breaches of fiduciary by the people in control, as long as they show good cause.
  2. It puts more accountability on corporations to be mindful of what they put in their communications, even if those communications are confidential.

Simply put, the case removes some of the barriers that have been in place for proving known wrongdoing on the part of large corporations. Without the ability to bypass the attorney-client privilege in this case, the prosecution may not have been able to prove the existence of Wal-Mart’s illegal bribery scheme.

All of this was made possible by a whistleblower who uncovered the bribery ring. When you become aware of any type of wrongdoing at your company, speak with a knowledgeable Dallas attorney at the Whistleblower Law for Managers firm.

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