Court Takes a Narrow View of the Privilege in Connection with a Huge Bank Merger

October 17, 2007

One might think that privilege issues would be clear in connection with a bank merger as large as JPMorgan’s 2004 merger with Bank One. However, privilege issues continue to be hashed out in the securities litigation that followed the merger.

In Blau v. Harrison (In re JPMorgan Chase & Co. Securities Litigation), MDL No. 1783, 2007 U.S. Dist. LEXIS 60095 (N.D. Ill. Aug. 13, 2007), the court ruled on a number of privilege issues — usually taking a very narrow view. Among other things, the court ruled that (1) JPMorgan’s draft proxy statements “prepared in order to gain regulatory approval of the merger” contained business rather than legal advice, and therefore did not deserve privilege protection; (2) the two banks did not share a common interest until they signed the merger agreement, so that communication between the banks and their outside counsel before that date lost their privilege protection; (3) documents withheld by JPMorgan for which the bank did not include a recipient on its privilege log did not deserve privilege protection (because “the privilege log is patently unable to allow the Court to determine by looking at the privilege log whether the attorney-client privilege should apply”). Id. at *9, *36.

Lawyers embarking on major corporate transactions should remember both the uncertainty of privilege issues and some courts’ inclination to take a very narrow view.