The Delaware Court of Chancery recently addressed whether an outside director’s use of another entity’s email account would compel the director to turn over such emails in stockholder litigation relating to his board service.  The decision provides important guidance for outside directors and the companies on whose boards they serve.  

The ruling arose in the context of a stockholder lawsuit challenging a decision by an independent committee of Dell directors to approve a recapitalization transaction.  The stockholder plaintiff sought a number of emails from an outside director who had used his former employer’s email account for his Dell-related communications.  The plaintiff contended that because the other company’s email policy allowed the company to access emails in certain circumstances, the director did not have a reasonable expectation of privacy, and therefore the attorney-client privilege did not apply.  At the relevant time of the emails, the outside director, who did not have a Dell email account, was retired from Accenture, but the company had approved his continued use of his accenture.com email account for personal matters.  

In opposing the relief sought, the outside director argued that although Accenture had the ability to monitor his email account, there was no evidence that it had ever done so and, accordingly, his expectation of privacy was reasonable.  The court concluded that the Dell director had not waived the privilege because, under the terms of Accenture’s email policy, the employee had a reasonable expectation of privacy with respect to the communications related to his Dell board service. Notably, the policy allowed for the use of company email accounts for limited personal use.  Other factors, including that the company reserved the right to monitor emails if necessary and the Dell director was aware of the policy, weighed in favor of finding that privilege had been waived, but the court reasoned that the first factor was the dominant one and outweighed the others, serving to preserve the privilege.  It appeared significant to the court that the former employer (Accenture) had allowed the Dell director to continue to use his account following his retirement, which signaled that the parties understood that the email account would be used for personal reasons.

Takeaways:

  • The decision indicates that the use of a separate entity’s email account for board or company communications will not necessarily waive the attorney-client privilege as to those emails.
  • That said, directors might consider using an email account provided by the company on whose board he or she serves or setting up a separate email account for board service.  Throughout the ruling, the court signaled that a “Gmail” account or other similar account that is generally private and not subject to monitoring would be the safest “corporate hygiene.”

In re Dell Technologies Inc. Class V Stockholders Litigation, C.A. No. 2018-0816-JTL (Del. Ch. Sept. 30, 2021).