Albertsons Companies, Inc. v. The Kroger Co.

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

June 25, 2026

Blake Rohrbacher, Esquire Bradley R. Aronstam, Esquire
Kyle H. Lachmund, Esquire S. Michael Sirkin, Esquire
Sandy Xu, Esquire Holly E. Newell, Esquire
Elizabeth J. Freud, Esquire Benjamin M. Whitney, Esquire
Richards, Layton & Finger, P.A. Kevin A. Rudolph, Esquire
920 North King Street Ross Aronstam & Moritz LLP
Wilmington, Delaware 19801 1313 North Market Street, Suite 1001
Wilmington, Delaware 19801

RE: Albertsons Companies, Inc. v. The Kroger Co.,
C.A. No. 2024-1276-LWW

Dear Counsel:

This letter resolves Albertsons Companies, Inc.’s motion to compel The

Kroger Co. to produce documents under a stipulated privilege waiver (the

“Motion”). For the reasons explained below, the Motion is denied, except to the

limited extent of providing guidance on the scope of the stipulated waiver as it

applies to internal law firm communications.

I. BACKGROUND

This action arises from the failed merger of grocery retailers Albertsons and

Kroger. Albertsons claims that Kroger willfully breached its obligation to use “best

efforts” (and, ultimately, to take “any and all actions”) to eliminate antitrust
C.A. No. 2024-1276-LWW
June 25, 2026
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impediments to the merger by proposing deficient divestiture packages.1 During

discovery, Kroger witnesses testified that they believed the company was complying

with its contractual duties based on legal advice from Arnold & Porter Kaye Scholer

LLP and Weil, Gotshal & Manges LLP.2 Albertsons then asserted that Kroger had

put at issue “legal advice regarding divestiture-related antitrust issues[.]”3

Kroger stipulated to a defined waiver of privilege over “legal advice on the

construction of the divestiture packages and the adequacy of the divestiture packages

from a regulatory perspective.”4 It agreed to review and produce internal firm

communications that “fall within the scope” of the waiver.5 Kroger explained that

its production encompassed “not only direct communications to the client, but also

documents that reflect the formulation of legal advice.”6 Albertsons took issue with

this approach and filed the Motion.

The present dispute centers on the breadth of the waiver and whether Kroger

is improperly withholding internal law firm communications.

1
Verified Am. Compl. (Dkt. 17) (“Compl.”) ¶¶ 374-410; see Pl.’s Mot. to Compel Def. to
Produce Docs. Pursuant to Stipulated Privilege Waiver (Dkt. 225) (“Mot.”) ¶ 1.
2
See, e.g., Mot. Ex. 6 at 92-93.
3
Mot. Ex. 5 at 42.
4
Mot. Ex. 2 at 1-2.
5
Mot. Ex. 3 at 1.
6
Mot. Ex. 4 at 2.
C.A. No. 2024-1276-LWW
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II. ANALYSIS

The attorney-client privilege “exists to ‘encourage full and frank

communication between clients and their attorneys[.]’”7 When a party makes the

“conscious decision” to waive this privilege and advance an advice of counsel

defense, it “operates as a partial waiver of the privilege.”8 The partial waiver’s scope

is limited to documents that “concern the same subject matter[]” of the waiver and

“ought in fairness to be considered together.”9

My analysis of the Motion begins with the text of the parties’ stipulated

waiver. Kroger agreed to waive privilege over “legal advice” concerning the

divestiture packages.10 Kroger asserts that to fall within the waiver, a document

must “involve[] the formulation or communication of legal advice to Kroger,”11 and

be connected to a “specific proposal or analysis being prepared for [the] client.”12

7
In re Quest Software Inc. S’holders Litig., 2013 WL 3356034, at *2 (Del. Ch.
July 3, 2013) (quoting Zirn v. VLI Corp., 621 A.2d 773, 781 (Del. 1993)).
8
Mennen v. Wilm. Tr. Co., 2013 WL 5288900, at *5 (Del. Ch. Sept. 18, 2013).
9
Del. R. Evid. 510(b); see also Mennen, 2013 WL 5288900, at *5.
10
Mot. Ex. 2 at 2 (emphasis added); see supra note 4 and accompanying text (quoting the
text of the waiver).
11
Mot. Ex. 4 at 2.
12
Mot. Ex. 5 at 1.
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Albertsons counters that the waiver requires the production of all Arnold &

Porter and Weil documents relating to the construction or adequacy of the divestiture

packages, regardless of whether they “reflect[] advice actually provided to

Kroger.”13 This interpretation reads the phrase “legal advice” out of the waiver.

“Legal advice” requires a communicative act to a client.14 It does not extend to every

uncommunicated musing of a law firm associate or a partner’s internal reaction to a

meeting.

Kroger’s approach—producing direct client communications alongside

internal documents that reflect the formulation of that advice—is consistent with the

waiver’s text.15 It also aligns with precedent. Delaware courts are chary of

construing a privilege waiver to encompass internal lawyer communications that

never culminate in advice to the client.

In In re Dairy Mart Convenience Stores, Inc., Derivative Litigation, for

example, Chancellor Chandler limited a privilege waiver to “documents that were

obtained, digested, or created [by outside counsel] and then in any way

13
See Mot. ¶ 3; see also id. ¶¶ 20-21.
14
Legal Advice, Black’s Law Dictionary (12th ed. 2024) (defining “legal advice” as
“advice of counsel,” meaning “[t]he guidance given by lawyers to their clients”); see Del.
R. Evid. 502(b); see also Def./Countercl. Pl.’s Opp’n to Mot. to Compel (Dkt. 233)
(“Opp’n”) ¶ 11.
15
Opp’n ¶ 8 (quoting Mot. Ex. 4 at 2).
C.A. No. 2024-1276-LWW
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communicated to the outside directors by [counsel.]”16 Similarly, in Pfizer, Inc. v.

Warner-Lambert Co., he drew a “practical” line between “documents, notes of

conversations, [and] advice of counsel that w[ere] given to the [client]” and “advice,

notes, memoranda, et cetera, generated by [outside] counsel, which w[ere] never

presented” or “offered to the [client.]”17 The former fell within a privilege waiver;

the latter did not. The Court of Chancery has maintained this distinction to preserve

room for lawyers to freely brainstorm.18 “Disclosing advice the[] [client] never

received moves no soil.”19

16
C.A. No. 14713, at 2-3 (Del. Ch. June 8, 1999); see Compendium of Selected Authorities
Cited in Def./Countercl. Pl.’s Opp’n to Mot. to Compel (Dkt. 233) Ex. 3.
17
C.A. No. 17524-CC, at 88-89 (Del. Ch. Dec. 21, 1999) (TRANSCRIPT); see also iBasis,
Inc. v. Koninklijke KPN, N.V., C.A. No. 4774-VCS, at 8-9 (Del. Ch. Oct. 5, 2009)
(TRANSCRIPT) (ordering internal law firm documents to be produced only if the
document “was the basis for advice given orally”); City of Roseville Empls.’ Ret. Sys. v.
Ellison, C.A. No. 6900-CS, at 4-5 (Del. Ch. May 29, 2013) (TRANSCRIPT) (“[A]s I
understand the Dairy Mart ruling and cases like it . . . If . . . there was a waiver of privilege
as to the advice the law firm gave, that does not mean that every internal memorandum at
the law firm where . . . people are kicking ideas back and forth, that you have to disclose
that[.]”); Mennen, 2013 WL 5288900, at *5-6.
18
See, e.g., High River Ltd. P’ship v. Hallwood Realty, LLC, C.A. No. 20276-VCS,
at 6-7, 10 (Del. Ch. June 6, 2003) (TRANSCRIPT) (“I’m not going to order a production
at this time[] . . . I think the advisors ought to have some space to do some thinking, unless
I hear there’s been anything communicated.”); R2 Invs., LDC v. Icahn, C.A. No. 1862-N,
at 47-48, 57-58 (Del. Ch. Mar. 20, 2006) (TRANSCRIPT) (recognizing that there must be
“some room for thinking[]” where documents reflecting “lawyers brainstorming
internally” about “the best way to advise [their] clients[]” need not be produced by the
outside law firm).
19
TCV VI, L.P. v. TradingScreen Inc., 2015 WL 5674874, at *7 (Del. Ch. Sept. 25, 2015).
C.A. No. 2024-1276-LWW
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Albertsons’ Motion ignores this precedent.20 It instead relies on Bandera

Master Fund LP v. Boardwalk Pipeline Partners, LP to argue that all “internal

workings” of Kroger’s outside counsel are discoverable.21 That is, it reads Bandera

to establish a general rule that non-client-facing documents must be produced

whenever a party puts its lawyers’ advice at issue.

Bandera, however, is factually unique. There, a defense was predicated on a

formal opinion of counsel, which placed the law firm’s own good faith directly at

20
Albertsons responded to the precedent in its reply brief. See Reply in Supp. of Pl.’s Mot.
to Compel Def. to Produce Docs. Pursuant to Stip. Privilege Waiver (Dkt. 235) (“Reply”)
¶¶ 12-18. It reads High River as suggesting that the court ordered production of “free-
thinking” and “lawyer brainstorming” documents. Id. ¶ 17. But the transcript reveals that
then-Vice Chancellor Strine protected purely intra-firm notes, observing that advisors
“ought to have some space to do some thinking” without disclosure, unless the materials
were communicated to the client. High River, C.A. No. 20276-VCS, at 10. Albertsons’
discussion of Ellison is also misplaced. Although Albertsons asserts that the case mandates
production of internal lawyer communications, the court shielded documents where
attorneys were “kicking ideas back and forth[.]” Ellison, C.A. No. 6900-CS, at 4-5; see
Reply ¶ 13. Albertsons’ interpretation of Mennen also overlooks the court’s statement that
the waiver was designed “to test what information had been conveyed by the client to
counsel and vice-versa.” Mennen, 2013 WL 5288900, at *6; Reply ¶ 16. Finally,
Albertsons contends that iBasis “did not address internal law firm communications.” Id.
¶ 17. Yet the court held that firm-side documents must be produced only “if there is a
memo that was the basis for advice given orally to the committee . . . or any other document
that was the basis for the oral advice[.]” iBasis, C.A. No. 4744-VCS, at 8-9.
21
Mot. ¶ 27; Bandera Master Fund LP v. Boardwalk Pipeline P’rs, LP, C.A.
No. 2018-0372-JTL, at 44 (Del. Ch. Apr. 7, 2020) (TRANSCRIPT) (holding that an
outside law firm’s “internal workings” are “probative and important to have” because they
could show that “the client was really pushing hard for advice that went in directions
favorable to its interests”).
C.A. No. 2024-1276-LWW
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issue.22 A second waiver in Bandera concerned the objective question of whether

certain disclosures were required by federal securities laws.23 Here, by contrast,

Albertsons is claiming willful breach of contract, which turns on Kroger’s actual

knowledge and subjective impressions. The uncommunicated views of Arnold &

Porter or Weil attorneys are not the measure of Kroger’s intent.

Nevertheless, Albertsons’ concern that “[t]here [is no] principled way for a

reviewer looking at a document” to apply this distinction is well taken.24

Distinguishing between protected intra-firm deliberations and materials that reflect

the creation of legal advice is a difficult line-drawing exercise.25 For guidance in

Kroger’s review, internal “back and forth” among lawyers—summarizing a meeting,

workshopping theories, or reflecting internal debate—is not legal advice.26 But

when a firm-side document is used to draft or prepare legal advice for

communication to the client—whether that advice is written or oral—it ceases to be

22
Bandera, C.A. No. 2018-0372-JTL, at 5, 26.
23
See id. at 35 (noting the defense was that the disclosures were legally required, which
“doesn’t just turn on the defendants’ motives[,] but on what the law required,” thereby
distinguishing it from a standard advice-of-counsel defense where subjective intent is
paramount).
24
Mot. ¶ 6.
25
See R2 Invs., C.A. No. 1862-N, at 47 (recognizing that Delaware law’s approach to
protecting internal law firm communications does not reflect “perfect line drawing”).
26
Ellison, C.A. No. 6900-CS, at 4-5.
C.A. No. 2024-1276-LWW
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mere brainstorming.27 A document reflecting the formulation of legal advice to

Kroger falls within the scope of the waiver and must be produced.28

III. CONCLUSION

Albertsons’ Motion is denied, unless Kroger’s production deviates from the

above guidance. Kroger must apply the parameters described in this letter opinion

to its document review and production. IT IS SO ORDERED.

Sincerely yours,
/s/ Lori W. Will

Lori W. Will
Vice Chancellor

27
Kroger has withheld documents reflecting “an attorney’s contemporaneous reaction to a
meeting or email that is not connected to any specific proposal or analysis being prepared
for [the] client.” Opp’n ¶ 19 (quoting Mot. Ex. 5 at 1); see also Mot. ¶ 4. This carve-out
is overbroad. If an internal law firm communication—including a “contemporaneous
reaction”—memorializes, reflects, or discusses information conveyed to the client, it
should be produced. Opp’n ¶ 8 (quoting Mot. Ex. 5 at 1).
28
See Tr. of Telephonic Oral Arg. on Pl.’s Mot. to Compel (Dkt. 246) 26-27 (Kroger’s
counsel acknowledging that protecting internal analysis is necessary but agreeing that once
it is clear a document “is being formed into a communication, whether that communication
is the actual document itself or a verbal communication . . . to be used at a meeting or a
call, that document would get produced”).