Email can be a trap for the unwary. The December 2020 decision In re WeWork Litigation highlights how directors who often use corporate instead of personal email accounts for sensitive emails can lose the protection otherwise afforded by attorney-client privilege.
As part of ongoing litigation between WeWork and its major investor SoftBank Group Corp., the Delaware Court of Chancery ruled that SoftBank would be required to produce certain documents after determining that the documents were not protected by attorney-client privilege.
In this case, the use of an email platform belonging to Sprint (more on how Sprint was involved later) for communications related to the WeWork litigation ultimately destroyed the attorney-client privilege.
The question before the court was this: Did employees of Sprint have a reasonable expectation of privacy when using their company email accounts, such that the documents in question would constitute “confidential communications” under Delaware Rule of Evidence 502?
The context is a familiar one for investors. In the case at hand, it was employees of investment powerhouse SoftBank who were wearing multiple hats at different companies.
From mid-2019 until April 1, 2020, SoftBank owned approximately 84% of Sprint. At that time, SoftBank asked certain of its affiliated individuals to serve multiple roles at different companies, including SoftBank, Sprint and WeWork.
Two of the employees who were working for both SoftBank and Sprint used Sprint email accounts to discuss documents related to discovery in the ongoing WeWork litigation. For clarity, Sprint was not a party to the litigation between Softbank and WeWork.
Using the test established in a prior, separate decision In re Asia Global Crossing, Ltd., the Delaware court in WeWork found that the emails related to discovery requests were no longer protected by attorney-client privilege because the emails passed through the Sprint email platform.
The Asia Global test looked at four factors:
- does the corporation maintain a policy banning personal or other objectionable use,
- does the company monitor the use of the employee’s computer or e-mail,
- do third parties have a right of access to the computer or e-mails, and
- did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?
Since the email system in question belonged to Sprint, the court in WeWork litigation examined the Sprint’s code of conduct, which stated that:
Employees should have no expectation of privacy in information they send, receive, access or store on any of Sprint’s computer systems or network. . . . Sprint reserves the right to review workplace communications (including but not limited to Internet activity, email, instant messages, social media or other electronic messages, computer storage and voicemail) as well as employees’ company-provided workspaces at any time.
In looking at the second factor in the Asia Global test on monitoring employee email, the court found the following:
Given Sprint’s express reservation of its right to review employee email communications and SBG’s failure to provide evidence of conduct inconsistent with this reservation, the second Asia Global factors weighs in favor of production of the Documents.
When looking at the third factor in the Asia Global test regarding third parties having a right of access to the computer or e-mails, the court stated:
SBG has not provided any compelling evidence that Combes or Sternberg [the employees using Sprint email accounts to discuss the documents] took “significant and meaningful steps to defeat access” by Sprint, “such as shifting to a webmail account or encrypting their communications.” The third Asia Global factor thus weighs in favor of production of the Documents.
Looking at the fourth and final factor in the Asia Global test regarding the corporation notifying or making employees aware of the use and monitoring policies, the court found that:
… it is readily inferable from the record that Combes and Sternberg were aware of Sprint’s email policies and thus could not have had a reasonable expectation of privacy when they used their Sprint email accounts to share SBG’s information, the subject matter of which concerned WeWork and had nothing to do with Sprint. More broadly, for all the reasons discussed above, each of the four Asia Global factors weigh in favor of production of the Documents.
The WeWork decision gives directors something more to think about when using corporate email. It’s also problematic in a world in which it is impractical for most directors to completely segregate email accounts given the fast pace of business. So, what is a responsible director to do?
First things first: Be mindful of when emails are or are not sensitive and potentially related to litigation. Much of a director’s company emails are purely administrative and inconsequential. Does it matter if you use email to discuss the location change of the director dinner? No.
Emails are privileged only if the communication is between a lawyer and client and for the purpose of obtaining legal advice. Dinner reservations aren’t that. In other words, directors should feel OK using their work email for those kinds of trivial communications.
However, if the communication relates to a concern about a potential or likely litigation event, think twice. Directors should be more cautious with information they would not want to produce to the other side as part of a discovery request. This is the time to take the effort to use a personal email account. Another option is to use a board portal.
Many board portals allow for communication that would be outside an employer’s email. The fact that some portals send a notice to your email reminding you to check the portal for messages should not interfere with privilege.
Finally, in a world of emojis, GIFs and memes, those that seem funny at the time will absolutely not be funny in a lawsuit. Refrain from any sort of casual banter when involved in an email chain related to litigation or potential litigation.
The WeWork decision is a good reminder for independent directors of the importance of taking a disciplined approach to emails. While it is probably fine for directors to use an employer’s email platform for many things, this can be deadly in the context of litigation.
When in doubt, switch to a personal email platform to avoid taking a risk that your emails will be subject to discovery and not protected by attorney-client privilege.
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