DE Court’s Decision Limits Former Directors’ Access to Privileged Information

November 28, 2021 –

DE Court’s Decision Limits Former Directors’ Access to Privileged Information:

Ballard Spahr LLP published an article on JD Supra about a recent Delaware Chancery Court decision to block access to privileged communications, between a corporation and its counsel, from former directors in their personal claims against the corporation.

The article, “Delaware Court Limits Former Directors’ Access to Privileged Information” by R. Lindsey and David Margules of Ballard Spahr, notes the exceptions to Delaware’s standard of holding director access to information as “essentially unfettered.” Kalisman v. Friedman (Del. Ch. Apr. 17, 2013).

Among the exceptions to the standard access are instances where:

• A contract limiting access exists;
• There exists a special committee, of which the director is not a member, and which retains separate counsel; and
• “…sufficient adversity exists between the director and the [entity] such that the director could no longer have a reasonable expectation that he was a client of the board’s counsel.” SerVaas v. Ford Smart Mobility LLC (Del. Ch. Nov. 9, 2021) at 6.

In deciding the current SerVaas case, the Court applied this new third exception, noting an inconsistency between granting director information rights to a former employee pursuing a breach of contract claim against the corporation.

To read the JD Supra post from Ballard Spahr LLP, click here.

To read the opinion of the Delaware Chancery Court, click here.

To read how Castaybert PLLC can assist you in employment matters involving privileged communications, click here.