Why It's Good to Be King

A deeper dive into the Chancellor's recent decision on Tesla/SpaceX email privilege waiver (or not) in the Twitter v. Musk case.

It's good to be king and have your own way.

Thomas Earl Petty, It's Good to be King, on Wildflowers (Warner Bros. 1994)

The Chancery Daily previously discussed In re Dell Tech [1], which denied a motion to compel production of a corporate director’s emails that were withheld as attorney-client privileged. The court found the director did not waive privilege by using an email account under the control of a former employer.

In the line of decisions implicated by the Dell ruling, which address waiver of privilege through use of email systems under the control of an employer, the analysis turns on an employee’s reasonable expectation of privacy. Those decisions look to a four-factor test articulated in the Southern District of New York in In re Asia Global Crossing [2], to determine whether a party asserting attorney-client privilege had a reasonable expectation of privacy in work email. This is somewhat of a rarity — to have a line of Delaware case law with its roots in a “foreign” precedent.

The Chancellor’s recent decision in Twitter, Inc. v. Elon R. Musk, et al., C.A. No. 2022-0613-KSJM, memo. op. (Del. Ch. Sept. 13, 2022) is the latest Delaware decision on the issue that some now refer to as the “Asia Global” line of cases. (TCD often refers to the same subject matter loosely in internal discussions as “IMS,” after In re Information Management Services, Inc. Derivative Litigation [3] — the first Delaware decision to address the issue.)

It should be noted — given that Asia Global is proverbially non-native (and some might argue even an invasive species) vis à vis Delaware -- that the Southern District of New York, in In re Reserve Fund Securities & Derivative Litigation [4], described the analysis under Asia Global as follows: