In re Information Management Services, Inc. Derivative Litigation
2013 Del. Ch. LEXIS 220
Del. Ch.2013Background
- IMS, a Delaware company with 50% ownership by Burton and 50% by Lake families, is governed by a four-member Board split evenly between families.
- Two senior IMS officers, William and Andrew, allegedly mismanaged the company; disputes culminated in derivative-style litigation by the Burton and Lake trusts.
- William and Andrew used work email accounts to consult with personal attorneys; they invoked attorney-client privilege but not the work-product doctrine.
- IMS’s policy warned that company computers are accessible by IMS staff and that personal use may be monitored or inspected, affecting confidentiality.
- The court applies Asia Global Crossing factors to assess confidentiality of work emails; the court ultimately grants the motion to compel production of privileged emails.
- The ruling rests on a federal and Maryland statutory framework (Wiretap Act and Stored Communications Act) and concludes that these do not override the common-law privilege in this work-email context.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether privilege applies to emails sent on work accounts | Burton argues no privilege due to company access | IMS contends legitimacy of privilege under policy and transmission rules | Privilege barred; emails must be produced |
| How Asia Global factors govern the confidentiality of work emails | Preference for confidentiality of communications with counsel | Factors weigh against confidentiality due to policy and access rights | Factors favor production; privilege not upheld |
| Do federal and Maryland wiretap/storage laws override privilege analysis | Statutes could protect privacy of electronic communications | Statutes do not override common-law privilege in this context | Statutes do not alter privilege outcome; production ordered |
| Impact of corporate policy and monitoring on employee expectations of privacy | Policies should protect privacy of communications | Policies and actual right to monitor destroy reasonable expectation of privacy | Policy and monitoring rights negate reasonable expectation of privacy; privilege not protected |
Key Cases Cited
- Zirn v. VLI Corp., 621 A.2d 773 (Del.1993) (Delaware privilege recognized; scope analyzed under common law and rules of evidence)
- Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107 (3d Cir.2003) (employer monitoring and policy impact on privacy and privilege in email communications)
- Goldstein v. Colborne Acquisition Co., 873 F. Supp. 2d 932 (N.D. Ill.2012) (employer access to work emails and privilege considerations under policy)