Expanded Director Liability for Email (Delaware) and Greenwashing (Australia)

Arnold and Porter writes:

A recent Delaware court decision, In re WeWork Litigation, put a spotlight on the risk of corporate employees and directors destroying privilege by communicating through email….In WeWork, the Delaware Court of Chancery found that the use of Sprint email accounts by Sprint employees doing WeWork-related work for SoftBank caused the communications between SoftBank and those individuals to lose the privilege that might otherwise have attached to them. The decision involved a ruling on a motion to compel defendant SoftBank to produce documents in litigation stemming from the alleged breach by SoftBank of its contractual obligation to complete a tender offer for shares of WeWork. During the period relevant to the litigation, SoftBank owned 84% of Sprint, and some of the Sprint executives and employees performed services for SoftBank related to WeWork. Two individuals used their Sprint email accounts to receive legal advice from SoftBank’s internal and external counsel that was relevant to the WeWork litigation and that did not relate to Sprint’s business. The motion turned on whether they nonetheless had a “reasonable expectation of privacy” sufficient to preserve the attorney-client privilege.

In finding that they did not have a reasonable expectation of privacy in the use of the Sprint email accounts, the court analyzed the four-factor test set forth in Asia Global, which, as noted above, had been used to analyze privilege waiver through the use of work email accounts for non-work purposes.

The court noted that Sprint’s Code of Conduct provided that employees should have no expectation of privacy in information transmitted via Sprint’s computer systems or network, and that Sprint reserved the right to review employee emails. The court viewed this as the type of clear policy restricting personal use of emails, and reserving employer monitoring rights, that has been considered—for purposes of the first Asia Global factor—to weigh in favor of requiring document production. [footnote omitted]

In Financial Review, Michael Roddan writes about Australian director liability for ‘greenwashing,” conveying a false impression or providing misleading information about how a company’s products or operations are more environmentally sound than they are in reality, a kind of accounting fraud.

Companies and their directors could be sued for “greenwashing” their commitments to achieve their net zero carbon pledges or emissions reductions targets, according to a legal opinion backed by some of Australia’s top business leaders.

Amid a growing movement across industry to disclose to shareholders climate-related risks, Noel Hutley, SC, and Sebastian Hartford Davis warned boards might be liable for “misleading or deceptive conduct” for selectively disclosing exposures to climate change or declaring green goals while lacking credible plans to achieve them.

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