Delaware Business Litigation Report

Chancery Denies Motion to Compel Director’s Privileged Communications Stored on Third-Party’s Email Server

In Re Dell Technologies Inc Class V Stockholders Litigation, Consol. C.A. No. 2018-0816-JTL (Del. Ch. Sept. 17, 2021) (TRANSCRIPT)
A director utilizing an email account associated with a different company for board service communications might unintentionally compromise otherwise privileged communications. Here, a member of Dell’s board of directors served on a special committee and utilized an email account associated with his former employer to communicate with the committee’s lawyers. Plaintiff moved to compel the production of otherwise privileged communications on his account, raising the question of whether the director had a reasonable expectation of privacy in his communications.

The Court of Chancery analyzed the issue utilizing the four Asia Global factors: i.e., 1) whether there is notice to employee that employer may monitor the communications; 2) the extent to which the employer actually engages in monitoring; 3) whether third parties have the right to access the communications; and 4) whether the employee was aware of the policies.

The Court emphasized that these privilege inquiries are highly fact specific, turning on the language of employer policies and the actions of the user. Here, the Court determined that the director was entitled to assert privilege because he had an objectively reasonable expectation of privacy. The language of his former employer’s policy was less stringent, for instance, than the policy at issue in the WeWork decision, which explicitly stated there was no expectation of privacy. The policy distinguished the use of personal or private emails noted by subject line and explicitly contemplated the use of the domain for personal communications. While the company maintained the right to monitor all communications, the Court found this language tended against production. Although the director did not label his communications as personal, the Court found that the relationship of the director to his former company indicated that all of his communications would be personal in nature, as he no longer worked for the company and was using the account as a retirement perk for non-company matters.

Finally, the Court cautioned that a best practice for outside directors may be to establish private email addresses to conduct board business, noting that if the director had used a private account, he could have avoided this dispute.

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