A Reasonable Expectation

A win for Elon Musk in the Delaware Court of Chancery

This is an action for specific performance of an April 25, 2022 merger agreement under which Elon R. Musk and two entities he owns, X Holdings I, Inc. and X Holdings II, Inc. (with Musk, “Defendants”), agreed to acquire Twitter, Inc. To communicate about the Twitter transaction, Musk used two sets of email accounts: one sponsored by Space Exploration Technology Corp. (“SpaceX”) and the other by Tesla, Inc. Musk asserted attorney-client privilege over emails in the SpaceX and Tesla accounts and withheld them in discovery. Twitter has moved to compel those documents.

To support a claim of attorney-client privilege, Musk must demonstrate that he had an objectively reasonable expectation of confidentiality in the SpaceX and Tesla emails. In certain circumstances, this court had applied the four-factor analysis of In re Asia Global Crossing, Ltd. to determine whether an employee had an objectively reasonable expectation of privacy in personal communications in their work emails. The Asia Global analysis looks to whether company policies or practices reduce an employee’s expectation of privacy in the employee’s work emails. SpaceX and Tesla email policies make clear that employees have no privacy interest in their work emails and warn that the companies reserve the right to monitor those emails. Citing to the plain language of those policies, Twitter argues that Musk had no reasonable expectation of privacy in his SpaceX and Tesla emails.

Although Twitter’s argument is a compelling one in many ways, Musk nevertheless prevails on this motion. To support his claim of attorney-client privilege, Defendants submitted affidavits from Musk, IT managers from SpaceX and Tesla, and the head of Tesla’s legal department. Those affidavits state that each company had a policy of limiting the circumstances in which they would monitor employee emails. They further 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 or “to the extent legally necessary,” and that “nobody” at SpaceX can access his email account without Musk’s express consent. These additional facts make Musk’s expectation of privacy objectively reasonable. Twitter’s motion is denied.

(Mike Frisch)