The McKesson – HBOC merger led to a legal morass due to allegations of accounting irregularies at HBOC. A few months later, McKesson discovered that, due to accounting fraud, HBOC’s common stock had been overvalued and that, consequently, McKesson had paid too much for it. McKesson hired a law firm and accounting firm to investigate HBOC accounting practices, and voluntarily provided the audit documents to the SEC and the United States Attorney’s Office, both of which were conducting their own investigations of HBOC and McKesson. After a sharp decline in value of McKesson stock, many of McKesson’s shareholders, including plaintiffs in this case, who were former shareholders of HBOC, sued McKesson alleging that they had incurred stock losses as a result of the accounting fraud. McKesson filed a counterclaim seeking damages for unjust enrichment on the ground that the HBOC shareholders received more shares of McKesson stock than they were entitled to receive due to the accounting fraud. The trial court granted a motion to compel the production of the audit documents; it denied a motion to dismiss McKesson’s unjust enrichment counterclaim.
The Georgia Supreme Court held: (1) the burden of proving a waiver of work-product protection lies on the party asserting the waiver; (2) the evidence supports the conclusion that McKesson waived work-product protection when it provided the audit documents to the SEC, as their confidentiality agreement was not airtight; (3) the former HBOC shareholders were not liable for unjust enrichment, as they were not accountable for the fraudulent acts of HBOC, and McKesson failed to allege that these shareholders controlled HBOC or used the corporate form to defraud McKesson. The mere fact that the shareholders may have received a windfall, in the form of additional shares of McKesson stock, at the time of the merger does not make them liable to McKesson. As the Ninth Circuit Court of Appeals said when it affirmed the dismissal of McKesson’s unjust enrichment claim in a related case, “[t]he sanctity of the corporate entity, as well as the policies militating against subjecting individual shareholders of a public company to liability for a merger gone bad, defeat McKesson’s effort to turn corporate law inside out.” McKesson HBOC v. New York State &c. Fund , 339 F3d 1087, 1093 (9th Cir. 2003). See full text (Fulton County Daily Report, subscription required.), and below:

The Shigley Law Firm represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a “SuperLawyer” in Atlanta Magazine and one of the “Legal Elite” in Georgia Trend Magazine. He is a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks).