Burkhart v. Genworth Financial, Inc., Del: Court of Chancery 2024
Issue Discussed: Discovery of fee agreements
Submitted by Polly Schiavone
Date Promulgated: August 21, 2024
Case: Richard F. Burkhart, et. al. v Genworth Financial, Inc., et. al, C.A. No. 2018-0691-NAC
Issue Discussed: Privilege and Work Product
Court: In the Court of Chancery of the State of Delaware
Dated Decided: August 21, 2024
Issue Decided: Whether funding agreements and/or unredacted fee agreements are discoverable in the context of a class action
In response to document requests, plaintiffs produced copies of contingent fee agreements (“Contingent Fee Agreements”) with everything redacted except the heading “Legal Fees and Expenses”. Depositions followed at which the defendants learned of the existence of a litigation funding agreement (the “Funding Agreement”) with certain unidentified litigation funders (the “Funders”). Plaintiffs then refused to produce a copy of the Funding Agreement or to disclose the Funders’ identities.
Thereafter, plaintiffs moved for class certification. In its motion, plaintiffs stated that there were no conflicts between the named plaintiffs and members of the proposed class. Plaintiffs also produced another, less redacted, copy of its Contingent Fee Agreements. This less redacted copy disclosed verbiage setting forth conditions in the event of a class action.
Plaintiffs then moved to compel production of both the Funding Agreement and unredacted copies of the Contingent Fee Agreements. The Court heard oral arguments and held an in camera review of the documents.
Defendants argued that the presence of Funders created potential conflicts of interest that may incentivize counsel to prioritize the interest of the Funders over the class. In response, plaintiffs argued that the Funding Agreement is not relevant and that it is protected by the work product doctrine.
In its analysis, the Court looked at three decisions that mandated production of funding agreements containing limited redactions based on work product grounds. The Court distinguished these cases pointing out that none pertained to class actions. The Court found the Funding Agreement to be relevant because (1) the Funders could conceivably exercise control over the litigation and because, (2) the language of the Funding Agreement demonstrated an expectation it would be produced and therefore an acknowledgement of relevance. In addition, during its in camera review, the Court applied the “because of litigation” test (which plaintiffs failed to address) and found that nothing in the Funding Agreement reflected any opinion, work product, risk analysis or other meaningful reference to strategy, mental impressions, or the lawsuit’s merits.
The Court went on to state that “Plaintiffs’ half-sentence argument for not producing fully unredacted Contingent Fee Agreements piggybacks entirely off their arguments as to the Funding Agreements.”
Based on the foregoing, the Court ordered that plaintiffs produce unredacted copies of the both the Funding Agreements and the Contingent Fee Agreements.
