W.L. Gore & Assocs., Inc. v. Long and BHA Group, Inc., C.A. No. 4387 (Del. Ch. Dec. 28, 2011) (Parsons, V.C.)

In this post-trial memorandum opinion, Vice Chancellor Parsons granted part of plaintiff’s, W.L. Gore & Associates, Inc. (“Gore”), motion to disregard testimony by former Gore employee and defendant, Darrell Long (“Long”).  Because Long invoked his Constitutional right against self-incrimination with respect to Gore’s questions involving possibly criminal downloading, retention, and use of confidential information within a certain timeframe, the Vice Chancellor disregarded a portion of Long’s testimony given during friendly cross-examination in which he denied sharing that information at any time.  The Vice Chancellor denied part of Gore’s motion, holding that Long’s testimony about legitimate reasons for accessing information outside of certain timeframes did not reasonably relate to downloading information during those timeframes, and Long’s testimony that he returned his work BlackBerry but kept his personal cell phone did not arise in the context of whether he had retained devices with Gore documents.

Long worked at Gore until June 12, 2008, when Gore terminated his employment.  Defendant BHA Group, Inc. (“BHA Group”) then hired Long. In connection with this action, Gore asserted claims for unauthorized access to, and misuse of, company electronic documents, in violation of 11 Del. C. §§ 932 and 935.  Long could also face criminal liability under §§ 932 and 935, and thus, testimony regarding these alleged activities could incriminate Long.  Before trial, Long provided Gore and the Vice Chancellor with a letter stating Long’s intention to invoke Fifth Amendment rights in response to questions regarding access, possession, or retention of Gore documents on electronic storage devices during specific time periods.

At trial, Gore called Long during its case in chief, and Long invoked the Fifth Amendment with respect to questions involving potentially incriminating information, but answered those questions when Gore’s counsel rephrased them to exclude reference to external storage devices or the specified timeframes.  Long also invoked the Fifth Amendment with respect to the Vice Chancellor’s question involving events during the specified timeframes.  On the subsequent friendly cross-examination, Long testified about his work, including that he had accessed information while traveling, returned his work BlackBerry, and retained his personal cell phone, but not about downloading Gore documents or the specified timeframes.  Gore then asserted that Long had waived his Fifth Amendment rights, requesting either re-examination of Long without privilege or striking of relevant friendly testimony.  The Vice Chancellor requested that the parties submit detailed arguments on the issue.  The next day, Gore examined Long but did not inquire about access, possession, or retention of Gore documents on external storage devices.

Gore asserted that Long had waived privilege because Long had testified to (1) legitimate reasons for accessing information, which overlaps with Gore’s questions regarding whether and why he downloaded data to storage devices; (2) not using Gore confidential information at BHA Group, which should allow Gore to ask what happened to the data and storage devices; and (3) returning and keeping storage devices; which could support conflicting inferences whether Long retained Gore documents.  The Vice Chancellor applied a totality of the circumstances test to determine whether Long had waived privilege by his testimony.  The parties contested, but the Vice Chancellor did not resolve, whether the proper Delaware legal standard for waiver of privilege applies to “reasonably related matters” or “details and particulars” of information raised by testimony.

The Vice Chancellor held that Long’s testimony regarding legitimate reasons for access to information outside of the specified timeframes was not reasonably related to whether and why he downloaded Gore documents during the specified timeframes.  With respect to the second asserted waiver, the Vice Chancellor held that Long’s blanket denial of sharing Gore confidential information with BHA Group was both reasonably related to, and among the details and particulars of, what Gore documents, if any, Long retained after leaving Gore.  The Vice Chancellor held that Long had not waived privilege, regarding whether he retained storage devices containing confidential information, by testifying that he had returned his work BlackBerry and kept his personal cell phone.  The Vice Chancellor held that testimony regarding the BlackBerry was limited to Long’s experience with the exit interview and testimony regarding the cell phone was limited to Long’s printing out information contained on that device, none of which was raised in the context of returning devices containing Gore documents.

Finally, the Vice Chancellor held that Gore had not failed to properly raise the waiver issue on direct after Long’s friendly cross-examination, because the Vice Chancellor requested and the parties provided detailed submissions regarding their arguments on the issue.  In fashioning an appropriate remedy, the Vice Chancellor noted that the parties had stipulated to, and the Vice Chancellor could properly circumscribe Long’s earlier testimony, by striking portions of Long’s self-serving testimony.

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