Judge Andrews Overrules Objections to Special Master’s Order Finding Litigation Financing Communications Not Privileged

April 3, 2018

Publication| Intellectual Property

In Acceleration Bay LLC v. Activision Blizzard, Inc., No. 16-453-RGA (D. Del. Feb. 9, 2018), Judge Andrews overruled objections to a special master’s order compelling production of emails that had been withheld as privileged between the plaintiff, Acceleration Bay LLC, and a litigation financing company. Acceleration Bay resisted production on three bases: the work-product doctrine, the common-interest privilege, and relevance.

The Court first found the work-product doctrine inapplicable on the basis that the primary purpose of the communications was to obtain a loan, not to aid in potential litigation. Judge Andrews also concluded that the documents fell outside the protection of the work-product doctrine because they were prepared for a non-party to the litigation.

The Court next concluded that even if the litigation financing company shared a common interest with Acceleration Bay (a question the Court did not decide), no such interest could have existed at the time of the communications: the parties’ interests could have become aligned for purposes of the common-interest privilege only after a financing deal was reached, which did not take place until after the communications at issue.

Finally, the Court regarded the communications as relevant, since they concerned issues such as validity, infringement, and damages.

Key Point: As the use of litigation financing has become more prominent in recent years, parties considering the use of such funds should be mindful of the ruling that work performed for the primary purpose of seeking litigation financing does not enjoy the protection of the work-product doctrine.

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