DealLawyers.com Blog

Some days it isn’t easy to come up with content for this blog, and today is one of those days. It looks like my choices have come down to either blogging about another one of Vice Chancellor Laster’s 100+ page opinions or biting the bullet & blogging about Elon Musk and Twitter.  Despite my reluctance to blog about the preliminaries in this significant but goofy case, the fact that Chancellor McCormick’s opinion resolving a privilege dispute between Musk & Twitter was only19 pages long has made my decision a relatively easy one.

The case involved one of many discovery disputes between the parties.  This one arose because Musk apparently used email accounts at SpaceX and Tesla to communicate about the Twitter deal.  Twitter wanted those emails, and Musk responded by asserting that they were subject to attorney-client privilege. Twitter moved to compel production, and Chancellor McCormick ultimately denied that motion.

In reaching that conclusion, she first observed that in order to support a claim of attorney-client privilege, Musk had to demonstrate that he had an objectively reasonable expectation of confidentiality in the SpaceX and Tesla emails. This requirement created a problem for Musk, because as Twitter pointed out in its motion, both companies had email policies that made it clear that that employees have no privacy interest in their work emails and warn that the companies reserve the right to monitor those emails.

Now – as Mel Brooks once pointed out in a famous scene from his film “History of the World, Part I”  – “It’s good to be da King!”  With that in mind, it’s not surprising to learn that Musk was able to produce affidavits from his IT managers at SpaceX and Tesla attesting to Musk’s ‘unrestricted’ personal use of those accounts and the sharply limited the access that others had to them.

Chancellor McCormick noted that in determining whether an employee has a reasonable expectation of privacy in his or her emails, Delaware has looked to a four-factor test established in In re Asia Global Crossing (S.D.N.Y. BKR 2005). That test looks primarily to whether “company policies and historical practices made it reasonable for employees to expect privacy in company-sponsored email.” Although acknowledging that the Chancery Court had compelled production of emails under a nearly identical policy in the WeWork litigation, she concluded that two mitigating factors mandated a different conclusion in this case. The first mitigating factor was the fact that both Tesla and SpaceX had policies limiting the grounds for monitoring employee emails, while the second mitigating factor was the existence of Musk-specific rules:

As the second and perhaps most forceful mitigating consideration, Defendants argue that the “default” policies of SpaceX and Tesla do not apply to Musk, and that each company adopted “Musk-specific” rules. For this, Defendants rely exclusively on the affidavits of Musk, IT managers from SpaceX and Tesla, and the head of Tesla’s legal department. Those affidavits state, unequivocally, that Musk had “unrestricted” personal use of his Tesla email account, that “no one” at Tesla can access those emails without Musk’s consent except “to the extent legally necessary,” and that “nobody” at SpaceX can access his email account without Musk’s express consent.

Chancellor McCormick acknowledged that a cynic might doubt that these Musk-specific policies really exist, considering that they are supported only by the affidavits of Musk & his employees and that no corporate records support their existence. Yet she concluded that the evidence “rings true”:

The court has little doubt that neither SpaceX nor Tesla view him as on par with other employees, that he has the power to direct operational decisions, and that nobody at either company would access his information without first obtaining his approval. One can debate whether this corporate reality makes for good “corporate hygiene,” but it is difficult to discredit the recitation of the facts.

In other words, when it comes to protecting personal emails on corporate accounts from discovery, “It’s good to be da King!”

– John Jenkins