Title: Wal-Mart Stores, Inc. v. Indiana Electrical Workers Trust Fund IBEW
Citation: N/A
Docket Number: 614, 2013
State: Delaware
Issuer: Delaware Supreme Court
Date: July 23, 2014

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
WAL-MART STORES, INC.,  
 
§ 
 
 
 
 
 
 
 
§ 
No. 614, 2013 
 
Defendant Below,  
 
 
§ 
 
Appellant/Cross-Appellee, 
 
§ 
§ 
Court Below-Court of  
v. 
 
 
 
 
 
§ 
Chancery of the State of  
 
 
 
 
 
 
§ 
Delaware 
INDIANA ELECTRICAL WORKERS 
§ 
C.A. No. 7779 
PENSION TRUST FUND IBEW, 
 
§ 
 
 
 
 
 
 
 
§ 
 
Plaintiff Below, 
 
 
 
§ 
 
Appellee/Cross-Appellant 
 
§ 
 
Submitted: July 10, 2014 
Decided: July 23, 2014 
 
Before HOLLAND, BERGER, and RIDGELY, Justices and BUTLER and 
WALLACE, Judges,1 constituting the Court en Banc. 
 
 
Upon appeal from the Court of Chancery.  AFFIRMED. 
 
 
Donald J. Wolfe, Jr., Esquire, Stephen C. Norman, Esquire, Tyler 
Leavengood, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware, 
Theodore J. Boutrous, Jr., Esquire, Gibson Dunn & Crutcher LLP, Los Angeles, 
California, Jonathan C. Dickey, Esquire, Brian M. Lutz, Esquire, Gibson Dunn & 
Crutcher LLP, New York, New York, Mark A. Perry, Esquire (argued), Gibson 
Dunn & Crutcher LLP, Washington, DC, for appellants. 
 
 
Stuart M. Grant, Esquire (argued), Michael J. Barry, Esquire, Nathan A. 
Cook, Esquire, Bernard C. Devieux, Esquire, Grant & Eisenhoffer, P.A., 
Wilmington, Delaware, for appellees. 
 
 
 
                                         
1  Sitting by designation pursuant to Del. Const. art. IV, § 12 and Supr. Ct. R. 2 and 4. 
 
2 
 
HOLLAND, Justice: 
 
 
The Defendant Below/Appellant-Cross Appellee Wal-Mart Stores, Inc. 
(“Wal-Mart” or the “Company”) appeals from a final judgment of the Court of 
Chancery identifying specific steps Wal-Mart must take in searching for 
documents, and specific categories of documents Wal-Mart must produce, in 
response to a demand made by Plaintiff Below/Appellee-Cross Appellant Indiana 
Electrical Workers Pension Trust Fund IBEW ( “IBEW” or “Plaintiff”) pursuant to 
title 8, section 220 of the Delaware Code.  
 
The Court of Chancery conducted a Section 220 trial on the papers to 
determine whether Wal-Mart had produced all responsive documents in reply to 
IBEW’s demand.  The Court of Chancery entered a Final Order and Judgment, 
which required Wal-Mart to produce a wide variety of additional documents, 
including ones whose content is privileged or protected by the work-product 
doctrine.  
 
Wal-Mart appeals the Court of Chancery’s Final Order with regard to its 
obligations to provide additional documents.  IBEW filed a cross-appeal, arguing 
that the Court of Chancery erred in failing to require Wal-Mart to correct the 
deficiencies in its previous document productions and in granting in part Wal-
Mart’s motion to strike its use of certain Whistleblower Documents. 
 
3 
 
 
We conclude that all of the issues raised in this appeal and cross-appeal are 
without merit.  Therefore, the judgment of the Court of Chancery must be 
affirmed. 
Facts 
 
IBEW is a retirement system that provides retirement benefits to electrical 
workers in Indiana.  Wal-Mart is a Delaware corporation that has its headquarters 
in Bentonville, Arkansas.  Wal-Mart operates stores in 27 different countries and 
employs about 2.2 million people worldwide.  The Company’s stock is listed on 
the NYSE.  Wal-Mart de Mexico, S.A. de C.V. (“WalMex”) is a subsidiary of 
Wal-Mart in which Wal-Mart owns a controlling interest.  WalMex is not a party 
to this action.  At all times IBEW has been a stockholder of appellant, Wal-Mart. 
 
On April 21, 2012, The New York Times, in an article titled Vast Mexico 
Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle (the “Times 
Article”),2 described a scheme of illegal bribery payments made to Mexican 
officials at the direction of then-WalMex CEO, Eduardo Castro-Wright, between 
2002 and 2005.  The Times Article revealed that Wal-Mart executives were aware 
of the conduct no later than September 21, 2005, and suggested that Wal-Mart’s 
responses were deficient.  IBEW summarized the Times Article in its answering 
brief, as follows: 
                                         
2  Appendix to Wal-Mart’s Opening Br. at A96-116. 
 
4 
 
In exchange for the bribes, WalMex received benefits ranging from 
zoning changes to rapid and favorable processing of permits and 
licenses for new stores.  The Company was aware of this illegal 
conduct by no later than September 21, 2005, when an executive of 
WalMex, Sergio Cicero Zapata (“Cicero”), informed the general 
counsel of Wal-Mart International, Maritza I. Munich (“Munich”), of 
“‘irregularities’ authorized by ‘the highest levels’ at [WalMex].” 
 
Munich initiated the investigation (the “WalMex Investigation”), first 
hiring a Mexican attorney to interview Cicero and evaluate his 
allegations, and then working with Willkie Farr & Gallagher LLP 
(“Willkie Farr”) to develop an independent investigation plan.  Wal-
Mart’s senior leadership in the U.S., however, rejected Willkie Farr’s 
November 2005 proposal for a “thorough investigation,” and instead 
chose a “far more limited” internal two-week “Preliminary Inquiry” 
involving Wal-Mart’s Corporate Investigations Department and 
International Internal Audit Services (“IAS”) departments.  The 
“Preliminary Inquiry” work-plan provided that, among other things, a 
progress report would be given to Wal-Mart’s management and the 
Chairman of the Audit Committee, Roland Hernandez (“Hernandez”), 
on November 16, 2005. 
 
Munich kept senior Wal-Mart officials in Arkansas apprised of the 
preliminary inquiry in a series of emails and detailed memoranda.  In 
December 2005, an internal Wal-Mart report on the preliminary 
inquiry’s findings was sent to Wal-Mart executives describing 
evidence “corroborat[ing] the hundreds of gestor payments [i.e., 
payments to ‘fixers’], the mystery codes, the rewritten audits, the 
evasive responses from [WalMex] executives, the donations for 
permits, the evidence gestores [i.e., ‘fixers’] were still being used.”  
The report’s conclusion was grave: “There is reasonable suspicion to 
believe that Mexican and USA laws have been violated.” 
 
Rather than expand the investigation, Wal-Mart executives chastised 
the investigators for being “overly aggressive . . . .”  On February 3, 
2006, Scott3 ordered the prompt development of a “modified 
protocol” for internal investigations.  As a result, control over the 
                                         
3  H. Lee Scott has been a director of Wal-Mart since 1999, Wal-Mart’s CEO from 2000 to 2009, 
and a Wal-Mart executive officer until January 31, 2011.   
 
5 
 
WalMex Investigation was transferred to “one of its earliest targets,” 
José 
Luis 
Rodríguezmacedo, 
WalMex’s 
general 
counsel 
(“Rodríguezmacedo”).  Munich complained to senior Wal-Mart 
executives, noting that “[t]he wisdom of assigning any investigative 
role to management of the business unit being investigated escapes 
me,” 
and 
resigned 
from 
the 
Company 
shortly 
thereafter.  
Rodríguezmacedo quickly cleared himself and his fellow WalMex 
executive of any wrongdoing, “wrapp[ing] up the case in a few weeks, 
with little additional investigation[,]” and concluding that “[t]here is 
no evidence or clear indication of bribes paid to Mexican government 
authorities with the purpose of wrongfully securing any licenses or 
permits.” 
 
 
On June 6, 2012, Wal-Mart received a letter from IBEW (the “Demand”).  
The letter requested inspection of broad categories of documents relating to the 
bribery allegations described in the Times Article (the “WalMex Allegations”).  
The purpose of the Demand, as explained in the letter, was to investigate: (1) 
mismanagement in connection with the WalMex Allegations; (2) the possibility of 
breaches of fiduciary duty by Wal-Mart or WalMex executives in connection with 
the bribery allegations; and (3) whether a pre-suit demand on the board would be 
futile as part of a derivative suit.  
On June 13, 2012, Wal-Mart responded to the Demand, agreeing, subject to 
certain conditions, to make available to IBEW Board materials such as minutes, 
agendas, and presentations, relating to the WalMex Allegations, as well as existing 
policies relating to Wal-Mart’s Foreign Corrupt Practices Act (“FCPA”) 
compliance.  Wal-Mart declined to provide documents that it determined were not 
 
6 
 
necessary and essential to the stated purposes in the Demand or that were protected 
by the attorney-client privilege and work-product doctrine. 
 
On August 1, 2012, Wal-Mart produced over 3,000 documents to IBEW, 
consisting of: policies relating to FCPA compliance, all Board and Audit 
Committee minutes and materials referencing the WalMex Allegations dating back 
to when those allegations arose in 2005, and Board and Audit Committee minutes 
and materials relating to Wal-Mart’s FCPA policy and compliance program.  
However, most of those documents were highly redacted without any explanation 
for the redactions. 
On August 13, 2012, IBEW filed a Complaint in the Court of Chancery 
pursuant to Section 220, alleging various deficiencies relating to Wal-Mart’s 
confidentiality designations and redactions in its production, and asserting that 
certain documents falling within the scope of the Demand had not been produced.  
In an attempt to satisfy IBEW, Wal-Mart provided an additional production on 
August 28, 2012, which included additional documents, less redacted material, and 
provided the reasons for the redactions that remained.   
 
On September 10, 2012, IBEW noticed depositions of certain Wal-Mart 
records custodians to gain information about documents that it believed should 
have been disclosed.  IBEW noticed depositions of a current senior officer, a 
former senior officer, and a Rule 30(b)(6) witness.  In response, Wal-Mart moved 
 
7 
 
for a protective order, alleging that the deposition notices encompassed virtually 
every document that might relate in any way to the WalMex Allegations. 
 
At an October 12, 2012 hearing, the Court of Chancery granted Wal-Mart’s 
motion for a protective order in part and restricted the scope of the depositions 
noticed by IBEW.  To comply with the Court of Chancery’s October 12 ruling, 
Wal-Mart reviewed more than 160,000 documents.  To locate any additional 
responsive documents, Wal-Mart also interviewed a number of current and former 
employees, officers, and directors, and it searched the data of eleven custodians.  
Wal-Mart then provided IBEW with a further supplemental production and an 
updated privilege log.  On December 6, 2012, IBEW conducted a Rule 30(b)(6) 
deposition.   
Months earlier, in May 2012, IBEW’s counsel received an anonymous 
package containing high-level Wal-Mart documents that were mentioned in the 
Times Article and pertained to the WalMex Investigation (the “Whistleblower 
Documents”).  Pursuant to the ethics rules, IBEW’s counsel immediately notified 
Wal-Mart’s counsel, who stated that the documents were stolen by a former 
employee.  Wal-Mart took no other action regarding the Whistleblower 
Documents, but moved to strike the documents and prevent IBEW from using 
them. 
 
8 
 
 
IBEW advised the Court of Chancery that Wal-Mart’s document production 
did not comply with its October 12 ruling.  The parties agreed to conduct a Section 
220 trial on the basis of a paper record.  The sole issue presented for judicial 
determination was whether Wal-Mart had produced all of the documents that were 
responsive to IBEW’s Demand.  
Final Order 
On May 20, 2013, the Court of Chancery heard oral argument and ordered 
Wal-Mart to produce all documents in the custody of eleven custodians whose data 
Wal-Mart had previously searched relating to (1) the WalMex Allegations, (2) 
policies and procedures regarding FCPA compliance, and (3) policies and 
procedures relating to internal investigations.  The Court of Chancery’s ruling also 
required Wal-Mart to produce documents in the files of Roland A. Hernandez, a 
former director and former Chairman of Wal-Mart’s Audit Committee.  In 
addition, the Court of Chancery ordered Wal-Mart to search the files of any person 
who served as an assistant to any of the twelve custodians.  The Court of Chancery 
further held that IBEW was entitled to documents protected by the attorney-client 
privilege, invoking the exception articulated in Garner v. Wolfinbarger4 (the 
“Garner doctrine”).  The Court of Chancery also ordered Wal-Mart to produce 
documents protected by the attorney work-product doctrine. 
                                         
4 430 F.2d 1093 (5th Cir. 1970). 
 
9 
 
 
At a June 4, 2013 hearing on the parties’ competing forms of order, the court 
also addressed IBEW’s request for production of documents from Wal-Mart’s 
disaster recovery (or “backup”) tapes, which was made for the first time at the June 
4 hearing. 
 
On October 15, 2013, the Court of Chancery entered the Final Order and 
Judgment.5  The Final Order requires Wal-Mart to produce: (1) officer (and lower)-
level documents regardless of whether they were ever provided to Wal-Mart’s 
Board of Directors or any committee thereof; (2) documents spanning a seven-year 
period and extending well after the timeframe at issue; (3) documents from disaster 
recovery tapes; and (4) any additional responsive documents “known to exist” by 
the undefined “Office of the General Counsel.”  The Final Order also requires the 
production of, among other things, “contents of Responsive Documents that are 
protected by the attorney-client privilege . . . and the contents that are protected by 
the attorney work-product doctrine under Court of Chancery Rule 26(b)(3),” but 
subject to the condition that IBEW “take appropriate steps to protect the 
confidentiality of [Wal-Mart’s] privileged documents, including filing and 
maintaining any such document as confidential.”6  
                                         
5  Ex. A to Wal-Mart’s Opening Br. at *5 [hereinafter Final Order]. 
 
6  Del. Code Ann. tit. 8, § 220(c) (2014) (“The Court [of Chancery] may, in its discretion, 
prescribe any limitations or conditions with reference to the inspection.”).  
 
10 
 
 
The Court of Chancery also granted Wal-Mart’s motion to strike IBEW’s 
use of the Whistleblower Documents in part, allowing IBEW only to use those 
documents that were posted on The New York Times website or to the 
congressional website, or referenced in Wal-Mart’s public filings.  The Court of 
Chancery ruled that IBEW’s request for Wal-Mart to correct the deficiencies in its 
previous productions had been waived. 
Parties’ Contentions 
 
In its appeal, Wal-Mart contends that the Court of Chancery erred in 
ordering Wal-Mart to produce documents that “far exceed” the proper scope of a 
Section 220 request.  Wal-Mart cites four ways in which the Court of Chancery’s 
Final Order is beyond the proper scope of a Section 220 proceeding: first, it 
requires Wal-Mart to produce officer-level documents; second, it requires Wal-
Mart to produce documents spanning a seven-year period, which is longer than the 
period in which the wrongdoing is alleged to have occurred; third, it requires Wal-
Mart to search disaster recovery tapes for data from two custodians; and fourth, it 
requires Wal-Mart to produce documents “known to exist” by Wal-Mart’s Office 
of the General Counsel. 
 
Wal-Mart further submits that the Court of Chancery improperly and 
incorrectly applied the Garner doctrine to documents that it asserts are protected 
by the attorney-client privilege.  Additionally, Wal-Mart contends that the Court of 
 
11 
 
Chancery erred by improperly applying the Garner doctrine to other documents 
that Wal-Mart asserts constitute protected attorney work product. 
 
In its cross-appeal, IBEW argues that the Court of Chancery erred by not 
ordering Wal-Mart to correct deficiencies in its search for, and collection of, books 
and records.  The Court of Chancery held that IBEW waived this argument.  IBEW 
submits, however, that because there was no prejudice to Wal-Mart, the issue 
should be decided on the merits. 
 
In its cross-appeal, IBEW also contends that the Court of Chancery’s 
conclusion that the Whistleblower Documents are subject to conversion is not 
supported by the record.  According to IBEW, Wal-Mart bore the burden of proof 
on this conversion theory and did not provide the Court of Chancery with any 
record to support its ruling.  IBEW argues that the Court of Chancery’s inference 
that because the Whistleblower Documents were sent anonymously, the individual 
must have stolen them, is unsupported by the record. 
Standard of Review 
 
Wal-Mart does not dispute that the Court of Chancery recognized that the 
proper standard to be applied to Section 220 actions is “necessary and essential.”7  
                                         
7  Saito v. McKesson HBOC, Inc., 806 A.2d 113, 116 (Del. 2002) (quoting Del. Code Ann. tit. 8, 
§ 220(b)). 
 
 
12 
 
Wal-Mart also does not dispute that IBEW stated at least one proper purpose.8  
However, Wal-Mart challenges the scope of the Final Order directing Wal-Mart to 
take specific steps to search for and to produce documents responsive to the 
Demand.  According to Wal-Mart, IBEW failed to meet its burden of showing that 
the scope of production ordered by the Court of Chancery was “necessary and 
essential” to IBEW’s proper purposes and that the Final Order provides IBEW 
with the type of discovery that is reserved for plenary proceedings. 
 
Documents are “necessary and essential” pursuant to a Section 220 demand 
if they address the “crux of the shareholder’s purpose” and if that information “is 
unavailable from another source.”9  Whether documents are necessary and 
essential “is fact specific and will necessarily depend on the context in which the 
shareholder’s inspection demand arises.”10  
 
The plain language of Section 220(c) provides that “[t]he Court [of 
Chancery] may, in its discretion, prescribe any limitations or conditions with 
reference to the inspection.”11  Accordingly, this Court reviews the Court of 
                                         
8  See, e.g., Appendix to Wal-Mart’s Opening Br. at A297 (“The only issue in dispute in this case 
is the extent of the corporate books and records to which Plaintiff is entitled and whether it 
extends beyond those documents the Company has already provided.”). 
 
9  Espinoza v. Hewlett-Packard Co., 32 A.3d 365, 371-72 (Del. 2011). 
 
10  Id. at 372.   
 
11  Del. Code Ann. tit. 8, § 220(c) (2014) (emphasis added). 
 
 
13 
 
Chancery’s “determination of the scope of relief available in a Section 220 books 
and records action for abuse of discretion.”12  The standard of review this Court 
applies to the Court of Chancery’s exercise of statutorily conferred discretion is 
highly deferential.13  However, questions of law, such as the applicability of the 
attorney-client privilege and the work-product doctrine, are reviewed de novo.14 
Officer-Level Documents 
 
Wal-Mart argues that the Court of Chancery abused its discretion and 
committed legal error by requiring it “to produce documents that were never 
presented to or created by members of [Wal-Mart’s] Board of Directors” and by 
creating a “presumption” that “officer-level knowledge should be imputed 
wholesale to the Board.”  These arguments are not supported by the record for two 
reasons: first, IBEW’s Demand had three proper purposes; and second, the Court 
of Chancery’s ruling did not create a presumption. 
                                         
12   Espinoza, 32 A.3d at 371; see also Security First Corp. v. U.S. Die Casting and Dev. Co., 
687 A.2d 563, 569 (Del. 1997). 
 
13  See, e.g., Remco Ins. Co. v. State Ins. Dep’t., 519 A.2d 633, 637-38 (Del. 1986) (“In view of 
the established facts and because it is the Court of Chancery in which the statute [18 Del. C. § 
5905] vests discretion, this Court will not attempt to substitute its own notions on the matter for 
those carefully articulated by the Court of Chancery.”) (citing Chavin v. Cope, 243 A.2d 694 
(Del. 1968)).  See also Chavin, 243 A.2d at 695 (“When an act of judicial discretion is under 
review the reviewing court may not substitute its own notions of what is right for those of the 
trial judge, if his judgment was based upon conscience and reason, as opposed to capriciousness 
or arbitrariness.”). 
 
14  Espinoza, 32 A.3d at 371. 
 
 
14 
 
 
Wal-Mart contends that it is “undisputed that the purpose of IBEW’s 
inspection here is limited to determining whether demand on the current Board 
with respect to the WalMex Allegations would be futile” and that, accordingly, 
officer-level documents are not “necessary and essential to [IBEW’s] stated 
purpose.”  The Court of Chancery acknowledged that the purpose of IBEW’s 
Demand “was primarily to look for facts to determine whether demand is, in fact, 
excused.”15  However, the other stated purposes of IBEW’s Demand were to 
investigate the underlying bribery and how the ensuing investigation was handled. 
The Court of Chancery acknowledged these other purposes.  In its bench 
ruling ordering Wal-Mart to produce documents, the Court of Chancery explained 
that this information could be used for two purposes:  
[T]he core information that the petitioners probably most legitimately 
need in order to plead demand excusal or—and I want to be very clear 
about this—or to conclude that the appropriate action is an actual very 
strongly written demand, that why are these seven people still 
compliance people at Wal-Mart or in executive positions when they 
knew material information about legal violations, which they 
apparently did not share with higher-ups, and deprived the board of its 
ability to take effective remedial action to protect the company’s 
reputation and interests?16 
   
As the Court of Chancery explained: 
                                         
15  Appendix to Wal-Mart’s Opening Br. at A512. 
 
16  Id. at A609-10. 
 
 
15 
 
I believe . . . that core information regarding the WalMex bribery, 
construction-permitting situation and how it was handled within Wal-
Mart by high-level officers and directors, that information about that 
is essentially central to the plaintiff’s request.  That is the wrongdoing 
they’re dealing with, is did Wal-Mart deal appropriately with that?  
Did Wal-Mart have effective internal controls to address situations 
like that and did it take appropriate remedial action when it was faced 
with that?17 
 
In fact, Wal-Mart’s Opening Brief to this Court states that “the plaintiff’s Section 
220 purpose was to investigate allegations in [The] New York Times concerning 
corrupt payments supposedly made by WalMex employees in Mexico, and how 
Wal-Mart investigated those allegations.”  Therefore, Wal-Mart’s argument that 
officer-level documents are not “necessary and essential” to one of IBEW’s three 
proper purposes is not supported by the record. 
 
Moreover, Wal-Mart does not dispute that key officers were involved in the 
WalMex Investigation.  Accordingly, officer-level documents are necessary and 
essential to determining whether and to what extent mismanagement occurred and 
what information was transmitted to Wal-Mart’s directors and officers.18  In 
McKesson Corp. v. Saito,19 this Court affirmed a Court of Chancery ruling that 
permitted inspection of officer-level documents.  In doing so, we noted that 
                                         
17  Id. at A582-83. 
 
18  See Saito v. McKesson HBOC, Inc., 806 A.2d 113, 118 (Del. 2002). 
 
19  818 A.2d 970 (Del. 2003) (Table) (affirming a Court of Chancery opinion that required the 
disclosure of officer-level documents). 
 
 
16 
 
“generally, the source of the documents in a corporation’s possession should not 
control a stockholder’s right to inspection under § 220.”20 
 
Wal-Mart acknowledges officer-level documents that “refer[ ] to 
communications with members of the Board” regarding the WalMex Investigation 
are necessary and essential to the demand futility inquiry.  However, the Court of 
Chancery’s ruling was not limited to officer-level communications with directors.  
The Court of Chancery held that officer-level documents from which director 
awareness of the WalMex Investigation may be inferred are also necessary and 
essential to IBEW’s Demand and must be produced. 
 
Wal-Mart argues that the Court of Chancery erred by adopting a 
presumption that “officer-level knowledge should be imputed wholesale to the 
Board.”  The record reflects that the Court of Chancery did not adopt such a 
presumption.  The Court of Chancery held that officer-level documents are 
necessary to Plaintiff’s inspection because Plaintiff may establish director 
knowledge of the WalMex Investigation by establishing that certain Wal-Mart 
officers were in a “reporting relationship” to Wal-Mart directors, that those officers 
did in fact report to specific directors, and that those officers received key 
information regarding the WalMex Investigation.   
                                         
20  Saito, 806 A.2d at 118. 
 
17 
 
The Court of Chancery concluded that the reasonable inference from such 
facts would be that those officers passed the information on to the directors.  The 
Court of Chancery’s acknowledgment that a reasonable inference can be 
established by circumstantial evidence is not the functional equivalent of creating a 
presumption.  The record reflects that the Court of Chancery properly exercised its 
discretion in ordering Wal-Mart to produce certain officer-level documents. 
Relevant Dates for Production 
 
Wal-Mart asserts that the Court of Chancery abused its discretion with 
respect to the date range of production required by the Final Order.  The Demand 
identified the relevant time period as “September 1, 2005 to the present.”  Wal-
Mart did not object to this time period in responding to the Demand and, in fact, 
agreed that it was appropriate: 
The Company believes that board minutes and agendas and Company 
policies regarding compliance with the Foreign Corrupt Practices Act, 
for the period of 2005 to the present, satisfy the necessary and 
essential requirement imposed by Section 220 and is therefore willing 
to produce them to your client.21 
 
Consistent with this representation, Wal-Mart then produced documents to IBEW 
dated into 2012.  However, at trial and in its September 2013 proposed final order, 
Wal-Mart sought to limit the relevant time period at December 31, 2010.  IBEW 
argues that: 
                                         
21  Appendix to IBEW’s Answering Br. on Appeal/Opening Br. on Cross-Appeal at B35-36 
(emphasis added). 
 
18 
 
a key category of responsive documents essential to Plaintiff’s proper 
purpose are documents concerning the Company’s ongoing 
compliance activities and changes to its operative compliance 
procedures, such as changes to the Audit Committee’s charter.  These 
documents, including documents reflecting changes in the wake of the 
WalMex Investigation, will bear on director and officer knowledge of 
the investigation, and thus liability.  Indeed, Wal-Mart’s privilege log 
confirms that responsive documents exist from September 2005 
through at least May 2012. 
 
The Court of Chancery agreed with IBEW’s argument and found that it was 
supported by the record.  We agree.  Therefore, we hold that the Court of Chancery 
properly exercised its discretion in setting the range of dates for production. 
Disaster Recovery Tapes for Two Custodians 
 
Wal-Mart argues that the Court of Chancery abused its discretion and 
“committed legal error in requiring the Company to collect and search the data 
from disaster recovery tapes for two additional custodians, or to explain why such 
collection would not be feasible.”  Some of the events relating to the WalMex 
Investigation occurred over seven years ago.  The record reflects that Wal-Mart 
voluntarily collected disaster tape recovery data for nine custodians but not for the 
two custodians at issue.   
IBEW argues that by collecting backup data for nine custodians, Wal-Mart 
implicitly recognizes that it may be a source of responsive documents.  The Final 
Order requires Wal-Mart to search this data for two additional custodians or, “[i]f 
it is not feasible . . . provide a detailed explanation for this inability to collect [the] 
 
19 
 
data.”22  The record reflects that the Court of Chancery properly exercised its 
discretion with regard to the production of disaster recovery tapes for the two 
additional custodians. 
General Counsel Documents 
Wal-Mart contends that the Court of Chancery committed legal error by 
ordering the production of documents “known to exist by . . . the Office of the 
General Counsel of Wal-Mart.”23  According to Wal-Mart, the requirement that 
Wal-Mart produce documents “known to exist by” that undefined and unidentified 
“Office” is vague and ambiguous.  In addition, Wal-Mart submits “this type of 
sweeping, indiscriminate production order flies in the face of Section 220’s 
mandate that the Court of Chancery narrowly circumscribe Section 220 relief to 
serve only the plaintiff’s stated purpose.”  Accordingly, Wal-Mart asserts that the 
Court of Chancery’s Final Order, with respect to the Office of the General 
Counsel, lacks the requisite “precision.”24 
The record reflects that Wal-Mart’s proposed order stated, “Defendant shall 
produce or log on its privilege log 1) all Relevant Data of the Identified Sources 
and 2) all Relevant Data of which its Litigation Counsel or its in-house counsel 
                                         
22  Appendix to Wal-Mart’s Opening Br. at A727. 
 
23  Final Order at *3. 
 
24  See Espinoza v. Hewlett-Packard Co., 32 A.3d 365, 372 (Del. 2011); Sec. First Corp. v. U.S. 
Die Casting and Dev. Co., 687 A.2d 563, 570 (Del. 1997). 
 
 
20 
 
charged with responding to the Demand are aware, regardless of how such 
Relevant Data was identified.”25  The term “Office of the General Counsel” in the 
Final Order replaced the “in-house counsel” term used by Wal-Mart in its proposed 
order.  Wal-Mart contends the term “the Office of the General Counsel” is 
ambiguous. 
In Saito, this Court affirmed the Court of Chancery’s use of descriptive 
terminology, such as “representatives,” “management,” “employees,” and 
“advisors.”26  Therefore, the Court of Chancery did not abuse its discretion by 
ordering the descriptive production of responsive documents “known to exist 
by . . . the Office of the General Counsel . . . .”  The appropriate forum for relief 
from an allegedly ambiguous term is in the Court of Chancery by filing a motion 
for clarification.27   
Garner Doctrine Adopted 
 
 
In this appeal, Wal-Mart raises two arguments regarding the Garner doctrine 
that it did not present to the Court of Chancery.  First, Wal-Mart submits that the 
                                         
25  Appendix to Wal-Mart’s Opening Br. at A717. 
 
26  See Saito v. McKesson HBOC, Inc., 806 A.2d 113 (Del. 2002). 
 
27 See, e.g., New Castle County v. Pike Creek Recreational Services, LLC, 2013 WL 6904387, at 
*2 (Del. Ch. Dec. 30, 2013) (“A motion for clarification may be granted where the meaning of 
what the Court has written is unclear.”); Naughty Monkey LLC v. MarineMax Northeast LLC, 
2011 WL 684626, at *1 (Del Ch. Feb. 17, 2011) (same). 
 
 
21 
 
Garner doctrine has never been adopted by this Court and therefore the availability 
of the Garner doctrine to litigants in Delaware is an open question.  Second, Wal-
Mart contends that, regardless of whether the Garner doctrine is generally 
available to litigants in a plenary proceeding, the doctrine should not be available 
to stockholders in the context of Section 220 litigation.   
These two arguments are new to this litigation, neither having been 
presented to the Court of Chancery.  Below, Wal-Mart argued only that IBEW had 
not shown “good cause” as required by the factors set forth in the Garner 
decision.28  Although Wal-Mart failed to preserve either of its Garner arguments 
for appeal, “when the interests of justice so require, [this] Court may consider and 
determine any question not” presented to the trial court.29  We have determined 
that the interests of justice require this Court to consider both of Wal-Mart’s 
Garner arguments.  
In Garner v. Wolfinbarger,30 the Fifth Circuit Court of Appeals recognized a 
fiduciary exception to the attorney-client privilege when it held:  
The attorney-client privilege still has viability for the corporate client.  
The corporation is not barred from asserting it merely because those 
demanding information enjoy the status of stockholders.  But where 
the corporation is in suit against its stockholders on charges of acting 
                                         
28  See Appendix to Wal-Mart’s Opening Br. at A332-40. 
 
29  Supr. Ct. R. 8. 
 
30  430 F.2d 1093 (5th Cir. 1970). 
 
 
22 
 
inimically to stockholder interests, protection of those interests as well 
as those of the corporation and of the public require that the 
availability of the privilege be subject to the right of the stockholders 
to show cause why it should not be invoked in the particular 
instance.31 
 
The Fifth Circuit then listed several factors that should be considered when 
evaluating whether the plaintiff has met its “good cause” burden.32  Thus, the 
Garner holding allows stockholders of a corporation to invade the corporation’s 
attorney-client privilege in order to prove fiduciary breaches by those in control of 
the corporation upon showing good cause. 
 
The Court of Chancery relied on the fiduciary exception to attorney-client 
privilege described in Garner to require the production of certain documents by 
Wal-Mart.  In the trial transcript the Court of Chancery stated: 
                                         
31  Id. at 1103-04. 
 
32  The Fifth Circuit listed the following factors as relevant to the good cause inquiry: 
 
There are many indicia that may contribute to a decision of presence or absence of 
good cause, among them the number of shareholders and the percentage of stock 
they represent; the bona fides of the shareholders; the nature of the shareholders’ 
claim and whether it is obviously colorable; the apparent necessity or desirability 
of the shareholders having the information and the availability of it from other 
sources; whether, if the shareholders’ claim is of wrongful action by the 
corporation, it is of action criminal, or illegal but not criminal, or of doubtful 
legality; whether the communication is of advice concerning the litigation itself; 
the extent to which the communication is identified versus the extent to which the 
shareholders are blindly fishing; the risk of revelation of trade secrets or other 
information in whose confidentiality the corporation has an interest for 
independent reasons. 
 
Id. at 1104.  
 
23 
 
And under Garner, to me, it’s a classic application of Garner, because 
it’s a situation where, you know, has there been—I think the 
shareholders—and I take them—given their role in the thing, I think 
they’ve got enough skin in the game to qualify under Garner. 
 
 . . . . 
 
So for the documents for which attorney-client solely has been sought, 
I’m ordering their production under Garner.33 
 
 
Wal-Mart argues that the Court of Chancery erred in applying the Garner 
doctrine because this Court has never endorsed the doctrine in a plenary 
proceeding, much less in a summary Section 220 proceeding.  This Court has, on 
two occasions, tacitly endorsed, in dicta, the Garner doctrine.  Two decades ago, in 
Zirn v. VLI Corp.,34 this Court acknowledged that the attorney-client privilege “is 
not absolute and, if the legal advice relates to a matter which becomes the subject 
of a suit by a shareholder against the corporation, the invocation of privilege may 
be restricted or denied entirely.”35  Our decision in Zirn specifically cited the Court 
of Chancery’s application of the Garner doctrine requiring “good cause” for the 
disclosure of privileged communications and explained that this Court “[did] not 
share the [Court of Chancery’s] conclusion that there was no showing of good 
                                         
33  Appendix to Wal-Mart’s Opening Br. at A586-89. 
 
34  621 A.2d 773 (Del. 1993). 
 
35  Id. at 781 (citing Valente v. Pepsico, Inc., 68 F.R.D. 361 (D. Del. 1975)). 
   
 
24 
 
cause based on direct conflict of interest . . . .”36  Nevertheless, in Zirn, this Court 
did not ultimately rely on the Garner doctrine in concluding that the privilege was 
waived through partial disclosure.37  
 
In the context of a Section 220 action in Espinoza v. Hewlett-Packard Co.,38 
this Court was presented with the question of the applicability of the Garner 
doctrine, but did not reach that issue.  In Espinoza, we ultimately cited the 
plaintiff’s failure to show that the documents requested were “essential” to his 
proper purpose as the reason for affirming the Court of Chancery’s ruling, rather 
than the applicability of Garner.  This Court explained: “The ‘essentiality’ inquiry 
should logically precede any privilege or work product inquiry, because the former 
inquiry is dispositive of a predicate question—the scope of inspection relief to 
which a plaintiff is entitled under § 220.”39   
 
Thus, Garner still has not been explicitly adopted by this Court in the 
context of either a plenary proceeding or a Section 220 action.  On at least three 
occasions, however, the Court of Chancery has expressly adopted Garner as a 
valid exception to attorney-client privilege in the context of Section 220 books and 
                                         
36  Id. 
 
37  See id. at 781-82. 
 
38  32 A.3d 365 (Del. 2011). 
 
39  Id. at 374. 
 
 
 
25 
 
records actions.40  Of particular relevance is Grimes v. DSC Communications 
Corp.,41 where the Court of Chancery relied on the Garner doctrine to compel the 
production of documents in a Section 220 action, despite “the different posture of 
[the] action from those in which courts normally analyze whether to invoke the 
exception to application of the attorney-client privilege.”42  In Grimes, the Court of 
Chancery explained why its use of Garner was appropriate in the Section 220 
demand context as follows: 
In the present action, the plaintiff seeks access to DSC’s books and 
records in order to determine whether the board wrongfully refused 
his demand, and if so to assist him in meeting the particularized 
pleading requirements of Rule 23.1.  Plaintiff is looking down the 
road to a demand-refused case where the focus will be on whether or 
not he can establish sufficient facts to overcome the decision made by 
the Special Committee and the board of directors in rejecting his 
demand.  Thus, while as of yet no action has been filed, the current 
posture of the case contemplates the possible filing of a derivative suit 
sometime in the future.  Thus, it is appropriate to analyze whether the 
plaintiff has demonstrated “good cause” under the factors set forth in 
Garner.43 
 
                                         
40  See Khanna v. Covad Communications Group, Inc., 2004 WL 187274, at *7 (Del. Ch. Jan. 23, 
2004) (discussing Garner and Grimes for the various factors to consider under the court’s “good 
cause” analysis in a Section 220 action); Saito v. McKesson HBOC, Inc., 2002 WL 31657622, at 
*12-13 (Del. Ch. Nov. 13, 2002) (applying the Garner factors for “good cause” in a Section 220 
books and records proceeding); Grimes v. DSC Communications Corp., 724 A.2d 561, 568-69 
(Del. Ch. 1998) (same). 
 
41  724 A.2d 561 (Del. Ch. 1998). 
 
42  Id. at 568. 
 
43  Id. at 568-69. 
 
 
26 
 
 
In Grimes, the Court of Chancery then applied the Garner factors and 
concluded that the plaintiff had demonstrated “good cause” and was entitled to 
receive the disputed documents as part of its Section 220 books and records 
demand.44  In summarizing its conclusion, the Court of Chancery in Grimes noted, 
“[o]f particular import is the fact that the documents sought are unavailable from 
any other source while at the same time their production is integral to the 
plaintiff’s ability to assess whether the board wrongfully refused his demand—the 
stated purpose of his Section 220 demand.”45   
 
The attorney-client privilege can be traced back to Roman times and is the 
oldest privilege recognized by Anglo-American jurisprudence.46  Delaware courts 
have agreed with the United States Supreme Court’s characterization of the 
attorney-client privilege as “critical” to “encourag[ing] full and frank 
communication between attorneys and their clients and thereby promot[ing] 
broader public interests in the observance of law and administration of justice,” 
including where the client is a corporation.47  Accordingly, the Garner doctrine 
                                         
44  Id. at 569. 
 
45  Id. 
 
46  See 8 John Henry Wigmore, Evidence in Trials at Common Law § 2290 (McNaughton rev. 
ed. 1961); see also Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). 
 
47  In re Lyle, 74 A.3d 654 (Del. 2013) (Table); see also Zirn v. VLI Corp., 621 A.2d 773, 781 
(Del. 1993) (quoting Upjohn, 449 U.S. at 389); Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992); 
Deutsch v. Cogan, 580 A.2d 100, 104 (Del. 1990). 
 
27 
 
fiduciary exception to the attorney-client privilege is narrow, exacting, and 
intended to be very difficult to satisfy.  It achieves a proper balance between 
legitimate competing interests. 
 
We hold that the Garner doctrine should be applied in plenary 
stockholder/corporation proceedings.48  We also hold that the Garner doctrine is 
applicable in a Section 220 action. However, in a Section 220 proceeding, the 
necessary and essential inquiry must precede any privilege inquiry because the 
necessary and essential inquiry is dispositive of the threshold question—the scope 
of document production to which the plaintiff is entitled under Section 220.49    
Garner Doctrine Properly Applied 
Wal-Mart contends that the Court of Chancery erred in holding that IBEW 
met its burden of showing the predicate necessity of the privileged information 
sought.  The record reflects that IBEW’s proper purposes sought information 
regarding the handling of the WalMex Investigation, whether a cover-up took 
place, and what details were shared with the Wal-Mart Board.  The Court of 
Chancery explained that the documents IBEW sought under Garner “go to those 
issues”: 
                                                                                                                                   
 
48 See Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970). 
 
49  Espinoza v. Hewlett-Packard Co., 32 A.3d 365, 374 (Del. 2011). 
 
 
28 
 
There is evidence in this record of indications within Wal-Mart itself 
by internal audit and legal staff of Wal-Mart policies, to not entrust 
investigations to the business unit being investigated; indications of 
concern about entrusting the investigation to people within the legal 
department at WalMex, who are actually subjects of the investigation, 
or should have been subjects; indications when their reports came 
back from WalMex that this wasn’t really a good-looking report, 
didn’t seem up to snuff, and yet nothing being done to remedy it.50  
 
 
After finding that the privileged documents were necessary and essential to 
IBEW’s proper purposes, the Court of Chancery considered the panoply of factors 
set forth in Garner in determining whether good cause existed to order the 
privileged documents to be produced.  The Court of Chancery began by examining 
whether IBEW had demonstrated a colorable claim against Wal-Mart and whether 
the information was available via other means at this point in the litigation.  The 
Court of Chancery concluded that a colorable claim existed based on “Wal-Mart’s 
own public statements about this [which] suggest that there were some real 
concerns about what was going on in Mexico and whether it was legal.”51  As for 
the availability of the information from other, non-privileged sources, the Court of 
Chancery concluded: 
[I]n a circumstance where judgments were made, which appear to be 
at odds with Wal-Mart’s own internal documents in terms of how you 
go about things, about avoiding going to the head of a business unit—
as I said, this is just not a situation where they did something internal. 
                                         
50  Appendix to Wal-Mart’s Opening Br. at A586. 
 
51  Id. 
 
 
29 
 
 
 . . . . 
 
There wasn’t a way to do it without outside counsel that doesn’t 
involve having the business unit itself do the investigation.  I don’t 
understand how you would probe these decisions through other 
means. 
 
 . . . . 
 
[B]ut where there is a colorable basis that part of the wrongdoing was 
in the way the investigation itself was conducted, I think it’s very 
difficult to find those documents by other means.52 
 
Wal-Mart argues that the Court of Chancery “misconstrued Garner’s 
‘necessity’ factor . . . .”  Wal-Mart asserts that the Court of Chancery “merely 
found that [Plaintiff’s] task would be made ‘more difficult’ without the production 
of such privileged documents.”  Wal-Mart’s support for this assertion is one 
sentence where the Court of Chancery stated that, “where there’s a colorable basis 
that part of the wrongdoing was in the way the investigation itself was conducted, I 
think it’s very difficult to find those documents by other means.”  However, the 
entire ruling reflects that the Court of Chancery found IBEW demonstrated that the 
privileged information sought was “necessary and essential” to one of its proper 
purposes: 
I’m going to start with what would ordinarily, I think, be . . . the more 
sensitive ruling, which is the documents which are actually on the 
privilege log. 
                                         
52  Id. at A588-89. 
 
 
30 
 
 
In my view, in terms of this 220 action . . . whether these are 
necessary to the plaintiff’s purpose and not tangential—that’s how I 
read “necessary and essential.”  Necessary and essential, I think just 
emphasizes because they’re redundant.  I mean, usually if something 
is necessary, I suppose it’s usually essential.  But my sense is it’s 
saying is this the core stuff?  Is this out there?53 
 
 
Wal-Mart argues that the Court of Chancery “committed legal error by 
expressly conflating” the Section 220 necessary and essential standard and the 
Garner good cause standard.  In fact, however, the Court of Chancery properly 
first made the predicate Section 220 finding that the privileged information was 
necessary and essential before it then applied the Garner doctrine and found that 
IBEW had demonstrated good cause.  This paradigm was exactly in accordance 
with our holding in Espinoza.  
 
Garner also directs a trial judge to analyze “whether the communication is 
of advice concerning the litigation itself; [and] the extent to which the 
communication is identified versus the extent to which the shareholders are blindly 
fishing.”54  The Court of Chancery addressed these factors, as follows: 
And I think the information is particularized.  It’s not just a broad 
fishing expedition.  There are specific documents.  And whether the 
communication is advice concerning the litigation itself, no, this is not 
after those litigations.  So I don’t think it’s trying to get into anybody 
                                         
53  Id. at A582 (emphasis added). 
 
54  Garner, 430 F.2d  at 1104. 
 
 
31 
 
how to defend against what the plaintiffs are doing.  This is during the 
real-time of Wal-Mart dealing with this thing.55 
 
 
With regard to the other Garner good cause factors, the record reflects that 
disclosure of the material would not risk the revelation of trade secrets (at least it 
has not been argued by Wal-Mart); the allegations at issue implicate criminal 
conduct under the FCPA; and IBEW is a legitimate stockholder as a pension fund.  
Accordingly, the record supports the Court of Chancery’s conclusion that the 
documentary information sought in the Demand should be produced by Wal-Mart 
pursuant to the Garner fiduciary exception to the attorney-client privilege. 
Work-Product Documents 
 
Wal-Mart withheld certain documents based on the work-product doctrine, 
to which the Court of Chancery responded: 
The work product documents fall out the same way, because the 
core—you know you have to have this heightened need.  Are they 
really important and urgent to what you’re trying to get at and then the 
unavailability showing as core to that.  For the same reason I 
mentioned with respect to Garner, I believe the work product doctrine 
documents also have to give way.56 
Wal-Mart argues that the Court of Chancery committed legal error by 
purportedly applying the Garner doctrine to documents over which Wal-Mart 
invoked the work-product doctrine.  The Garner doctrine applies to information 
                                         
55  Appendix to Wal-Mart’s Opening Br. at A587. 
 
56  Id. at A590. 
 
 
32 
 
protected by the attorney-client privilege, but not to work product.57  Instead, 
pursuant to Court of Chancery Rule 26(b)(3), a party may obtain access to non-
opinion work product “upon a showing that the party seeking discovery has 
substantial need of the materials in the preparation of the party’s case and that the 
party is unable without undue hardship to obtain the substantial equivalent of the 
materials by other means.”58  
Wal-Mart asserts that the Court of Chancery erroneously applied Garner, 
rather than Court of Chancery Rule 26(b)(3), to the work-product issue.  A careful 
reading of the Garner factors demonstrates that they overlap with the required 
showing under the Rule 26(b)(3) work-product doctrine.  One factor under Garner 
is “the apparent necessity or desirability of the shareholders having the information 
and the availability of it from other sources.”59  In fact, this Court has utilized the 
Garner factors in the context of a work-product analysis in the past.60  When 
addressing the defendant’s work-product argument in Zirn v. VLI Corp., this Court 
stated: 
                                         
57  Saito v. McKesson HBOC, Inc., 2002 WL 31657622, at *11 (Del. Ch. Oct. 25, 2002) (“this 
Court has held that there is no Garner exception to the work product privilege.”). 
 
58  Ct. Ch. R. 26(b)(3). 
 
59  Garner, 430 F.2d at 1104. 
 
60  See Zirn v. VLI Corp., 621 A.2d 773 (Del. 1993).  
  
 
33 
 
[We] are satisfied that Zirn has demonstrated “good cause” for 
production of documents prepared in anticipation of the patent 
litigation.  Of the factors set forth in Garner v. Wolfinbarger, which 
support the requisite showing of “good cause” that a shareholder must 
demonstrate to overcome a corporation’s claim of privilege, the 
following appear present here.61 
 
 
The Court of Chancery in this case recognized this overlap and utilized the 
same reasoning for its decision regarding the work-product doctrine.  In Grimes v. 
DSC Communications Corp.,62 the Court of Chancery also discerned the overlap in 
required showings and overruled a similar work-product claim: “For the same 
reasons that the plaintiff has shown ‘good cause’ to overcome the claim of 
attorney-client privilege, I conclude he has also shown a substantial need for the 
information for purposes of the work-product doctrine.”63  In this case, the record 
reflects that the Court of Chancery’s work product ruling was properly and solely 
based upon Rule 26(b)(3) and only referred to the privilege rationale of Garner as 
overlapping with its own separate work product analysis.  
Cross-Appeal 
IBEW’s first argument in its cross-appeal is that the Court of Chancery 
should have required Wal-Mart to collect documents from additional custodians.  
The Court of Chancery found that IBEW waived this argument by not raising it in 
                                         
61  Id. at 782. 
 
62  724 A.2d 561 (Del. Ch. 1998). 
 
63  Id. at 570. 
 
 
34 
 
its opening post-trial brief in that court.  IBEW concedes its waiver64 but asks this 
Court to consider its arguments on the merits.  We have concluded that such 
consideration is not required “in the interests of justice.”65   
 
IBEW’s second argument in its cross-appeal challenges the Court of 
Chancery’s order requiring IBEW to return to Wal-Mart certain privileged 
documents that were delivered to IBEW’s counsel by an anonymous source.  The 
record reflects that a number of documents included in the anonymous mailing 
were publicly available on The New York Times website and a congressional 
website.  Approximately three documents were not publicly available, including 
one document IBEW wanted to use as evidence that Wal-Mart conducted an 
inadequate search or previously failed to disclose all relevant documents.    
Wal-Mart moved to strike all of the Whistleblower Documents, including 
those available to the public.  According to Wal-Mart, these materials were stolen 
from it by a former employee and had been disseminated without Wal-Mart’s 
consent.  Wal-Mart revealed the name of the former employee it suspected of 
removing the documents.  It also stated that the former employee worked in the IT 
department and that Wal-Mart had sought an order to keep him from disseminating 
                                         
64  See, e.g., Emerald Partners v. Berlin, 2003 WL 21003437, at *43 (Del. Ch. Apr. 28, 2003), 
aff’d, 840 A.2d 641 (Del. 2003) (citations omitted) (finding an argument waived when it was not 
included in the party’s opening post-trial brief). 
 
65  Supr. Ct. R. 8. 
 
35 
 
further information.  Wal-Mart sought the Court of Chancery’s assistance in 
securing the return of its stolen property from IBEW.   
The Court of Chancery ruled that the privilege had been lost by Wal-Mart as 
to certain Whistleblower Documents that had been posted on websites maintained 
by The New York Times and members of Congress.  However, the Court of 
Chancery applied a conversion theory and held that the remaining Whistleblower 
Documents—that is, those that have not been published by the media or elected 
representatives—remain privileged and therefore must be returned to Wal-Mart.  
The Court of Chancery determined that the anonymous nature of the mailing was 
strong circumstantial evidence of conversion.  The Court of Chancery stated, “I’ll 
tell you what’s a really strong evidence in favor of that it was unauthorized, is 
that—did the person who sent it to you identify him or herself?”66  According to 
the Court of Chancery, even if the “whistleblower” was in a position of authority, 
the fact that he or she chose to remain anonymous indicated that they did not have 
authority to disseminate the information.   
The Court of Chancery ruled that IBEW had to return the Whistleblower 
Documents that were not otherwise publicly available.  In arriving at its 
conclusion, the Court of Chancery explained: 
                                         
66  Appendix to Wal-Mart’s Opening Br. at A449. 
 
 
36 
 
I look at it as if you have someone else’s stuff and you shouldn’t have 
that, then you got to give it back.  We’re not going to do that in a way 
where the entire world has the stuff, but the entire world does not have 
these other documents. 
 
So I’m requiring those to be given back and I’m requiring the 
references to those to be stricken.  I don’t believe that the—the 
defendants—I mean, the company waived anything by proceeding in 
the way it did. 
 
. . . .  
 
Now, it might be a momentary return in a sense that that is certainly 
without prejudice to any argument in the – on the merits that there are 
responsive documents that the company didn’t produce.67 
 
The record reflects that the Court of Chancery properly discharged its 
equitable discretion in crafting a remedy for Wal-Mart, while still leaving an 
avenue for IBEW to ultimately obtain the returned Whistleblower Documents.  
The Court of Chancery’s ruling was made without prejudice and allowed IBEW to 
address the returned Whistleblower Documents “on the merits that there are 
responsive documents that the company didn’t produce.”  Thus, IBEW may still be 
entitled to the Whistleblower Documents it has been ordered to return if those 
documents should have been otherwise disclosed by Wal-Mart within the scope of 
the information already ordered to be produced by the Court of Chancery. 
 
 
                                         
67  Id. at A479-80. 
 
37 
 
Scope of Relief 
The Court of Chancery carefully assessed the scope of documents that 
should have been made available to IBEW.  During the colloquy with the parties, 
the Court of Chancery addressed the number of custodians, the chain of corporate 
communications, the internal investigation policy, the issue of duplication of 
documents coming from different sources, and the 30(b)(6) depositions, among 
other issues.  The record supports the Court of Chancery’s conclusion that the 
documents it ordered to be produced satisfied the necessary and essential standard 
in the context of this Section 220 case. 
The Court of Chancery’s ruling is consistent with Saito v. McKesson HBOC, 
Inc.,68 in which this Court held that, upon meeting the requirements of Section 220, 
the stockholder “should be given access to all of the documents in the 
corporation’s possession, custody or control, that are necessary to satisfy that 
proper purpose.”69  “[W]here a [Section] 220 claim is based on alleged corporate 
wrongdoing, and assuming the allegation is meritorious, the stockholder should be 
given enough information to effectively address the problem . . . .”70  Whether or 
not a particular document is essential to a given inspection purpose is fact specific 
                                         
68  806 A.2d 113 (Del. 2002). 
 
69  Id. at 115. 
 
70  Id. 
 
 
38 
 
and will necessarily depend on the context in which the stockholder’s inspection 
demand arises.  In determining that “scope of relief,” our courts must circumscribe 
orders granting inspection “with rifled precision.”71 
Wal-Mart contends that the Final Order was not circumscribed “with rifled 
precision.”  However, “rifled precision” also requires a fact specific inquiry and 
can only be determined in the context of a specific case.  The term “rifled 
precision” requires the Court of Chancery to make a qualitative analysis of 
documents demanded.  “Rifled precision” is not a quantitative limitation on the 
stockholder’s right to obtain all documents that are necessary and essential to a 
proper purpose.72  In this case, the Court of Chancery understood that “rifled 
precision” is a qualitative standard and must be applied contextually: “you have 
to—you actually have to interpret it sensibly and contextually.  And in a situation 
like this, it’s not like you’re talking about a board minute or two.”73   
 
Wal-Mart argues that “[t]he scope of production ordered by the Chancery 
Court is unprecedented . . . .”  In fact, however, following this Court’s remand in 
Saito, the Court of Chancery entered an implementing order substantially broader 
                                         
71  Id. at 117 n.10 (citing Brehm v. Eisner, 746 A.2d 244, 266-67 (Del. 2000)) (emphasis added). 
 
72  See Saito, 806 A.2d 113. 
 
73  Appendix to Wal-Mart’s Opening Br. at A566. 
 
 
39 
 
in scope than the Final Order entered in this case.74  In Saito, the defendant-
corporation appealed the implementing order, and this Court affirmed, holding that 
the order “was an appropriate implementation of the [stockholder’s] entitlement to 
discovery established under this Court’s decision in Saito v. McKesson, HBOC, 
806 A.2d 113 (Del. 2002),” and involved “no abuse of discretion.”75  Comparing 
the order entered in Saito and specifically approved by this Court with the 
significantly more limited scope of the Final Order entered here, we hold that the 
Final Order constituted an appropriate exercise of discretion. 
Conclusion 
 
For the reasons set forth in this Opinion, the judgment of the Court of 
Chancery is AFFIRMED. 
                                         
74  Compare Saito v. McKesson HBOC, Inc., C.A. No. 18553 (Del. Ch. Sep. 20, 2002) (ORDER), 
with the Final Order. 
 
75  McKesson Corp. v. Saito, 818 A.2d 970 (Del. 2003) (Table).