Court Opinion

ID: 8210799
Source: CourtListenerOpinion
Date Created: 2022-09-30 16:03:18.415665+00
Date Added: 2024-06-11T16:41:56.643287
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

    TWITTER, INC.,                           )
                                             )
                 Plaintiff,                  )
                                             )
         v.                                  )    C.A. No. 2022-0613-KSJM
                                             )
    ELON R. MUSK, X HOLDINGS I,              )
    INC., and X HOLDINGS II, INC.,           )
                                             )
                 Defendants.                 )

        ORDER APPOINTING SPECIAL DISCOVERY MASTER TO CONSIDER
            PLAINTIFF’S AND DEFENDANTS’ DISCOVERY MOTIONS

        1.      Plaintiff Twitter, Inc. (“Plaintiff”) and Defendants Elon R. Musk, X Holdings

I, Inc., and X Holdings II, Inc. (collectively, “Defendants”) have each filed discovery

motions challenging the other side’s assertion of privilege over discovery materials.

Defendant’s Sixth Discovery Motion seeks to compel the production of documents over

which Plaintiff asserted the attorney-client privilege.1 Plaintiff’s Sixth Discovery Motion

seeks to compel the production of documents over which Defendants asserted work product

protection.2 These two motions are collectively referred to as the “Discovery Motions.”

        2.      The Honorable Christopher Sontchi of Delaware ADR, LLC is hereby

appointed special discovery master (the “Special Discovery Master”) with the charge of

1
 C.A. No. 2022-0613-KSJM, Docket (“Dkt.”) 468 (Defendants Sixth Discovery Motion);
see also Dkt. 533 (Plaintiff’s Opposition to Defendants Sixth Discovery Motion).
2
  Dkt. 531 (Plaintiff’s Sixth Discovery Motion); see also Dkt. 576 (Defendants’ Opposition
to Plaintiff’s Sixth Discovery Motion).
reviewing the Discovery Motions, and facilitating a resolution or making a

recommendation in the form of a report as to their resolution.

       3.     The Special Discovery Master shall file in this court a written acceptance of

this appointment, and the appointment shall be effective upon the filing of the acceptance.

The Special Discovery Master shall serve at the pleasure of the court, and the provisions

of this order shall remain in effect pending further order of the court.

       4.     The Special Discovery Master has all powers and authority necessary to

fulfill the charge set forth in this order. Included within this grant of authority are the

powers to communicate with the parties jointly or separately, require the parties to provide

information, and consult with the court without the participation of the parties.

       5.     With respect to Defendants’ Sixth Discovery Motion, the Special Discovery

Master will review in camera a sample of redacted or withheld documents selected by

Defendants.

              a.     The number of documents in that sample shall be 200, unless the

       Special Discovery Master establishes a different scope of in camera inspection.

              b.     The black letter law governing the Special Discovery Master’s review

       is uncontroversial. Under Delaware law, “the attorney/client privilege ‘protects the

       communications between a client and an attorney acting in his professional capacity

       where the communications are intended to be confidential, and the confidentiality

       is not waived.’”3    “The privilege may be paraphrased as extending to a (1)

3
 Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992) (quoting Riggs Nat. Bank of Washington,
D.C. v. Zimmer, 355 A.2d 709, 713 (Del.Ch. 1976)).

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         communication, (2) which is confidential, (3) which was for the purpose of

         facilitating the rendition of professional legal services to the client, (4) between the

         client and his attorney.”4

                   c.      The privilege applies fully to corporate clients, and extends to

         communications between the attorney and the agents or employees of the

         corporation so long as the other elements of the test are met.5

                   d.      The party asserting attorney-client privilege bears the burden of

         proving that the privilege applies to a particular communication.6

         6.        With respect to Plaintiff’s Sixth Discovery Motion, the Special Discovery

Master will review in camera a sample of redacted or withheld documents selected by

Plaintiff.

                   a.      The number of documents in that sample shall be 200, unless the

         Special Discovery Master establishes a different scope of in camera inspection.

                   b.      Resolution of Plaintiff’s Sixth Discovery Motion shall be guided by

         the discussion of work production protection contained in this court’s August 25

         order.7        As explained there, Rule 26(b)(3) generally protects “documents,

4
  TCV VI, L.P. v. TradingScreen Inc., 2017 WL 11590772, at *1 (Del. Ch. Dec. 21, 2017)
(cleaned up).
5
 Buttonwood Tree Value Partners, L.P. v. R. L. Polk & Co., 2021 WL 3237114 (Del. Ch.
July 30, 2021), adopted, (Del. Ch. 2021), cert. denied, 2021 WL 4958253 (Del. Ch. Oct.
26, 2021); see also Wolfe and Pittenger, Corporate and Commercial Practice in the
Delaware Court of Chancery, Second Edition §7.02(b)(2) (2021).
6
    Moyer, 602 A.2d 68, 72.
7
    Dkt. 246.

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          electronically stored information, and tangible things” that have been “prepared in

          anticipation of litigation or for trial by or for another party or by or for that other

          party’s representative (including the other party’s attorney, consultant, surety,

          indemnitor, insurer, or agent).”8

                 c.       Rule 26(b)(3) does not provide an unqualified protection; the rule

          permits discovery of work product “upon a showing that the party seeking discovery

          has substantial need of the materials in the preparation of the party’s case and that

          the party is unable without undue hardship to obtain the substantial equivalent of

          the materials by other means.”9

                 d.       Rule 26(b)(3) shelters only the mental processes of the attorney, not

          the expert.10

                 e.       The party asserting the work-product protection bears the burden of

          proving that the privilege applies to a particular communication.11

          7.     Working with the parties, the Special Discovery Master shall establish the

process and timeline for fulfilling the mandates of this Order.

8
    Id. at 12 (quoting citing Ct. Ch. R. 26(b)(3)).
9
    Id.
10
  Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254, 261 (Del. 1995); see also 8A
Wright & Miller § 2029 at 17–18 (explaining that “[t]he knowledge of an expert is not
privileged” and “is not part of the work product”).
11
  Mechel Bluestone, Inc. v. James C. Justice Cos., Inc., 2014 WL 7011195, at *10 (Del.
Ch. Dec. 12, 2014).

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       8.     Unless otherwise permitted by the Special Discovery Master, all exceptions

to interlocutory reports prepared by the Master are stayed under Court of Chancery Rule

144(d) until the filing of the Special Discovery Master’s final report. Following the filing

of any final report, any party taking exception shall file a notice of exceptions within one

business day of the date of the report. This court will promptly set a schedule for briefing

on the exceptions, taking into account the schedule of this action.

       9.     The Special Discovery Master shall be compensated at his expedited hourly

rate. At his discretion, the Special Discovery Master may make use of attorneys and

support staff, who may bill at their expedited hourly rates. The amounts referred to in this

paragraph are collectively the “Expenses.”

       10.    The Special Discovery Master shall provide invoices to the parties on no less

than a monthly basis. The parties shall remit interim payment within ten days after

receiving an invoice.

       11.    Initially, the parties will each bear half of the Expenses. The Special

Discovery Master may recommend an allocation of responsibility for the Expenses that

takes into account the parties’ respective degree of success.

       12.    At the conclusion of his assignment, the Special Discovery Master shall

petition the court for approval of the Expenses. If the court declines to approve any

amounts previously paid, then the Special Discovery Master shall refund those amounts.

If the court adopts any recommended allocation of Expenses based on the parties’

respective degree of success, then the Special Discovery Master shall refund any

overpayment upon payment of the reallocated amounts. Any approved amounts that the

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parties fail to pay will be taxed as court costs and charged through the LexisNexis e-filing

system.

       13.    The parties shall aid the Special Discovery Master in his duties. No party to

this action, and no other person acting or purporting to act as a manager, member, assignee,

director, officer, employee, attorney, or agent of any party to this action, shall institute any

proceeding in any forum other than this court challenging any action or recommendation

by the Special Discovery Master.

       14.    The Special Discovery Master shall have no liability to the parties or any

other persons for actions taken in good faith pursuant to this order. In any challenge to the

Special Discovery Master’s actions, the Special Discovery Master is presumed to have

acted in good faith. The Special Discovery Master shall be entitled to all protections,

limitation from liability, and immunity available at law or in equity to a court-appointed

representative including, without limitation, all protection, limitation from liability and

immunity provided by the indemnification provisions of applicable law.

       15.    Expenses, including attorneys’ fees, incurred by the Special Discovery

Master in defending any civil, criminal, administrative, or investigative action, suit, or

proceeding arising by reason or in connection with the Special Discovery Master’s

appointment, or the performance of his duties hereunder, shall be paid by the parties in

accordance with the payment allocation described above in advance of the final disposition

of such action, suit, or proceeding, subject to the repayment of such amount if it shall be

                                               6
ultimately determined by this court that the Special Discovery Master is not entitled to be

indemnified.

                                          /s/ Kathaleen St. J. McCormick
                                          Chancellor Kathaleen St. J. McCormick
                                          Dated: September 30, 2022

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