MBBP Partner Carl Barnes was recently quoted in a Massachusetts Lawyers Weekly article written by Patrick Murphy, entitled “Survivor of Merger Controls Attorney-Client Privilege.” The article discusses Novack v. Raytheon, a recent Massachusetts Superior Court decision holding that, under Delaware law and the terms of a merger agreement, control of the attorney-client privilege relating to pre-merger communications between BBN Technologies Holding Corp. and its counsel passed to the acquirer, Raytheon Company. The privilege could not, therefore, be asserted after the merger by the representative of BBN’s former shareholders. The Superior Court, applying Delaware law, simply followed the Delaware Chancery Court’s 2013 decision in Great Hill Equity IV, LP v. SIG Growth Equity Fund I, LLLP. As an M&A attorney for more than 30 years, Carl considered whether the same result would be reached under the Massachusetts Business Corporation Act. Carl stated:
Under Delaware law, the effect of a merger is the conveyance of all property, rights, privilege, powers and franchises to the surviving corporation. On the other hand, G.L.c. 156D 11.07(a)(3) is more narrowly drawn, providing merely that the surviving entity is vested in all property owned and every contract right possessed by the entity that is merged into the survivor. There is probably more room for interpretation in Massachusetts than there is in Delaware, Barnes said. But he said there is still a strong argument to be made under Massachusetts law that the control of the attorney-client privilege passed to the surviving corporation in a merger.It defies logic that the successor will get the property and contract rights, and nothing else.
For further analysis and practical recommendations for M&A lawyers in Massachusetts, see Carl’s own article, “Massachusetts Court (Sort of) Adopts Delaware’s Great Hill Holding Regarding the Attorney-Client Privilege in Mergers” or please feel free to contact Carl.