Carlos Eduardo Lorefice v. R. Angel Gonzalez Gonzalez ( 2019 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
November 18, 2019
Theodore A. Kittila, Esquire William E. Gamgort, Esquire
James G. McMillan, III, Esquire Curtis J. Crowther, Esquire
Halloran Farkas & Kittila LLP Young Conaway Stargatt & Taylor, LLP
5803 Kennett Pike, Suite C 1000 North King Street
Wilmington, DE 19807 Wilmington, DE 19801
RE: Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
Dear Counsel,
I write regarding Plaintiffs’ Motion for Entry of an Order to Show Cause
Concerning Defendants’ Violation of Plaintiffs’ Attorney-Client Privilege and
Refusal to Turn Over ESI (the “Motion”). 1 The parties have engaged in contentious
discovery in this matter. This Motion addresses the dispute over whether work e-
mails between Plaintiff Carlos Eduardo Lorefice Lynch and in-house counsel
associated with Plaintiff Grupo Belleville Holdings, LLC (“Belleville” or the
“Company”) are confidential and subject to the attorney-client privilege.
Plaintiffs filed the Motion in July 2019, when depositions loomed in the near
future. But the Motion ballooned into several rounds of briefing, the depositions
were rescheduled, and the privilege issue crystallized at oral argument on October
15.2 To give guidance on privilege in advance of those depositions, I issued a brief
letter opinion granting Plaintiffs’ Motion on October 18, and indicated that I would
detail my reasoning in the near future.3 Today, I provide my reasons for granting the
Motion. I write for the parties and provide only the background necessary to resolve
the pending dispute.
1
Docket Item (“D.I.”) 56 [hereinafter “Mot.”].
2
See D.I. 109, 146.
3
D.I. 111.
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I. Background
This matter was brought under 6 Del. C. § 18-110, and presents the question
of whether Lynch properly acquired a sixty-five percent interest in Belleville in
2018. 4 The case is expedited and set for trial in December 2019.
Belleville, a Delaware limited liability company, is a holding company for
ownership interests in Argentine companies, which in turn own a variety of media
assets located in Buenos Aires, Argentina.5 For example, Belleville owns Inversora
de Medios y Comunicaciones S.A. (“IMC”). 6 IMC has seven subsidiaries, including
Telearte Sociedad Anonima, Empresa de Radio y Television (“Telearte”).7 Belleville
conducts business in Florida and Argentina through a number of its subsidiaries,
such as Telearte. 8 The employees responsible for operating Belleville’s subsidiary
businesses work and reside in Argentina.9
At the time of Belleville’s formation, Defendant Gonzalez owned five percent
of the Company. 10 Defendant Televideo Services, Inc. (“Televideo”) owned the
remaining 95 percent.11 Televideo is a Florida corporation with its formal principal
place of business in Florida.12 Gonzalez controls Televideo, 13 which is affiliated
4
See generally D.I. 1 [hereinafter “Compl.”]. Specifically, Plaintiffs seek injunctive and
declaratory relief arising from Defendant Gonzalez and Defendant Televideo Services,
Inc.’s efforts to strip Lynch of his ownership interest in the Company. In the alternative,
Lynch seeks damages for the value of his interest in Belleville. Id. ¶ 1.
5
Id. ¶ 2; D.I. 94 at 17.
6
D.I. 56, Lynch Decl. ¶ 3 [hereinafter “Lynch Decl.”].
7
Lynch Decl. ¶ 3.
8
Id.
9
D.I. 94 at 17 & n.10.
10
Compl. ¶ 20. Presently, Televideo owns 30 percent of Belleville; Gonzalez owns five
percent of Belleville and is the majority owner and President of Televideo. Id. ¶¶ 11–12.
11
Id. ¶ 20.
12
Id. ¶ 12.
13
Id. ¶ 11.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
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November 18, 2019
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with other Gonzalez-controlled entities and brands operating throughout Latin
America. 14
In 2007, Belleville adopted a resolution to ensure its equity holdings in
Argentine companies complied with Argentine law. 15 To implement that resolution,
Belleville granted Lynch a special power of attorney and designated him as
Belleville’s “legal representative” in Argentina. 16 In September 2007, Lynch
purchased five percent of Belleville from Televideo. 17 In January 2008, Lynch
purchased an additional sixty percent of Belleville from Televideo.18 Lynch thus
became Belleville’s majority holder, owning sixty-five percent of the Company. 19
Gonzalez was Belleville’s sole manager from 2006 until 2009, when Lynch
became co-manager. 20 Thus, when Televideo transferred its membership interests to
Lynch in 2007 and 2008, Gonzalez was the sole owner and exclusive manager of the
Company. 21 Gonzalez and Lynch remained Belleville’s co-managers until February
2018, when Lynch used his position as majority equity holder to execute a Limited
Liability Company Agreement appointing himself as Belleville’s sole manager.22
In addition to controlling Televideo, Gonzalez operates Albavision, a network
of affiliated media companies operating throughout Latin America. 23 There is no
“Albavision” entity. 24 Rather, Gonzalez either directly or indirectly owns the entities
that comprise and control Albavision, such as Televideo.25 The term Albavision is
14
See, e.g., D.I. 62 at 5.
15
Compl. ¶ 21.
16
Id. ¶ 22.
17
Id. ¶ 23.
18
Id. ¶ 26.
19
Id. ¶ 28.
20
Compl. ¶¶ 31, 51; D.I. 62 at 2.
21
Compl. ¶¶ 23, 26–31; D.I. 62 at 3.
22
Compl. ¶ 51.
23
D.I. 62 at 4–5; D.I. 62, Ex. B, Gonzalez Aff. ¶¶ 4–5 [hereinafter “Gonzalez Aff.”].
24
D.I. 94 at 9; Gonzalez Aff. ¶¶ 3–4.
25
Gonzalez Aff. ¶¶ 2–5.
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widely recognized as a brand that Gonzalez owns and operates. 26 The claims in this
action “only relate to Albavision assets in Argentina.” 27
The Motion addresses an email server affiliated with Albavision, which
Televideo owns and Gonzalez controls. That server hosts emails with the domain
“albavision.tv,” which Gonzalez created for the Albavision brand. Televideo
provides albavision.tv email service to several entities, including Belleville and its
subsidiaries, on the albavision.tv domain for a fee. 28
Employees of Belleville and its subsidiaries were given albavision.tv email
addresses for the purpose of executing and delivering email communications
pursuant to their respective job duties.29 Televideo’s server hosted those emails.30
Employees with an albavision.tv email address, including Lynch, were aware that
Gonzalez, via Televideo, owned and controlled the albavision.tv address and
server.31 Lynch is Belleville’s manager and legal representative.32 He also serves as
IMC’s manager, director, and President and holds senior positions with additional
Belleville subsidiaries. 33 Televideo is not, and never has been, Lynch’s employer. 34
The emails at issue in the Motion are between Lynch and two attorneys
employed by Belleville, named Ariel Lambert and Marcos Landaburu (collectively,
“the Attorneys”). In 2009 and 2010, Belleville hired the Attorneys as counsel “for
Belleville and its subsidiaries and other Latin-American companies.” 35 In particular,
Telearte employs the Attorneys as in-house counsel to provide legal advice to
26
D.I. 62 at 5.
27
Gonzalez Aff. ¶ 6.
28
See D.I. 94 at 9; D.I. 85 at 4.
29
D.I. 62 at 5; D.I. 62, Ex. A, Lima Aff. ¶ 5 [hereinafter “First Lima Aff.”].
30
Mot. ¶ 6; First Lima Aff. ¶ 6.
31
First Lima Aff. ¶ 5; D.I. 85 at 5.
32
Lynch Decl. ¶ 3.
33
Id.
34
Id.; D.I. 94 at 9.
35
Gonzalez Aff. ¶ 9.
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Telearte and other IMC subsidiaries. 36 The Attorneys were never formally employed
by Televideo or Albavision. 37
Lynch and the Attorneys used their albavision.tv email accounts to
communicate with each other. 38 The Attorneys used their albavision.tv email
addresses to provide legal advice for Telearte and other IMC subsidiaries. 39 The
Attorneys also used those email addresses to provide Lynch with legal advice on
personal matters.40 At the heart of this action is whether Lynch properly acquired
sixty-five percent of Belleville. At the time of the events in question, Lynch and the
Attorneys worked for or represented Belleville or its subsidiaries. Lynch asserts that
the Attorneys also represented him in his personal capacity in connection with his
sixty-five percent acquisition, and that such representation was separate and distinct
from any legal advice the Attorneys provided Lynch in his capacity as Belleville’s
manager or an employee of Belleville’s subsidiaries. 41
According to the Attorneys, they did not provide legal advice to Gonzalez or
any other Defendants with respect to Lynch’s sixty-five percent acquisition. 42 When
using the albavison.tv addresses to communicate about Lynch’s personal legal
matters, Lynch and the Attorneys all understood that the Attorneys were acting as
36
D.I. 56, Lambert Decl. ¶¶ 3–4 [hereinafter “Lambert Decl.”]; D.I. 56, Landaburu
Decl. ¶¶ 3–4 [hereinafter “Landaburu Decl.”].
37
Briefing on the Motion included a kerfuffle over whether the Attorneys were employed
by Albavision because their respective LinkedIn profiles listed Albavision as their
employer. See D.I. 68, 69. Both Attorneys submitted affidavits clarifying their
involvement with Albavision. See D.I. 94, App. at A402, A405. They identified
themselves as Albavision employees on their LinkedIn profiles because they “provided
legal services to many entities that operate under the Albavision brand name and it was
important for [their] LinkedIn profile[s] to be consistent with the role that business contacts
perceived.” Id. The profiles, therefore, reflected “how outsiders would perceive” their
roles, “not [their] actual employment relationships.” Id.
38
See, e.g., Lynch Decl. ¶ 6.
39
See, e.g., Lambert Decl. ¶¶ 1, 3–4; Landaburu Decl. ¶¶ 1, 3–4.
40
Lynch Decl. ¶¶ 4–6; Lambert Decl. ¶¶ 3–4; Landaburu Decl. ¶¶ 3–4.
41
Lynch Decl. ¶¶ 4–7; see also Lambert Decl. ¶¶ 3–6; Landaburu Decl. ¶¶ 3–6.
42
Lambert Decl. ¶¶ 5–6; Landaburu Decl. ¶¶ 5–6.
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Lynch’s personal attorneys. 43 In connection with Lynch’s personal matters, the
Attorneys did not believe Gonzalez or their corporate employers were their clients,
even though they communicated with Lynch using their employer-provided email
addresses. 44
Lynch and the Attorneys stopped using the albavision.tv email addresses in
early 2018. Around the time Lynch executed the LLC Agreement giving him sole
management authority over Belleville, Belleville migrated its employees’ email from
the Televideo-hosted albavision.tv email addresses to email addresses hosted on a
server owned by Telearte.45 At that time, Plaintiffs completely abandoned use of the
albavision.tv domain and server.46 Thus, Gonzalez, via Televideo, no longer
controlled the server that hosted Belleville’s and its subsidiaries’ employee emails.
After the migration, Lynch could control and access emails hosted on the Telearte
server. The migration was consistent with Lynch’s decision to strip Gonzalez of his
co-manager status.
Lynch contends that after he decided to migrate away from the albavision.tv
domain, he had a call with Sergio Vinicio Ponciano Lima, Gonzalez’s IT specialist,
and Fernando Banus, Telearte’s Technical and Operations Manager who had worked
for Albavision between October 2014 and February 2018. 47 Lima denies that this
call occurred.48 Lynch asserts that he “directed Lima to abstain from accessing
and/or reviewing any of Lynch’s emails using the email address cll@albavision.tv
and also informed Lima that all emails using cll@albavision.tv were private, and
that if any person accessed or reviewed the emails, it would constitute a breach of
the law.” 49
43
Lynch Decl. ¶¶ 5, 7; Lambert Decl. ¶¶ 4–5; Landaburu Decl. ¶¶ 4–5.
44
Lambert Decl. ¶¶ 5–6; Landaburu Decl. ¶¶ 5–6.
45
Mot. ¶ 6; Gonzalez Aff. ¶ 18.
46
See D.I. 85 at 5; see also Mot. ¶ 6; D.I. 56, Varela Decl. ¶ 4(a) [hereinafter “Varela
Decl.”]; D.I. 101, Ex. B, Lima Aff. ¶ 7 [hereinafter “Second Lima Aff.”].
47
D.I. 94, App. at A398, A407–08.
48
Second Lima Aff. ¶ 6. I addressed the effect of the disagreement over this call on
October 15. See D.I. 146 at 24.
49
D.I. 94 at 13 (citing D.I. 94, App. at A398, A408).
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It is undisputed that Gonzalez searched Lynch’s albavision.tv emails and
potentially the emails of other Telearte employees who had previously used the
albavision.tv server. 50 Gonzalez did so between February 2018 and July 11, 2019,
before this litigation began.51 Because Defendants control the albavision.tv server,
Plaintiffs cannot access the albavision.tv email accounts of Lynch and the Attorneys
on that server.52
As a result, Plaintiffs have been unable to collect or review the emails located
on the albavison.tv server for purposes of this litigation. 53 As a result, on
July 11, 2019, Plaintiffs asked Defendants for access to Plaintiffs’ albavision.tv
accounts so that Plaintiffs could meet their discovery obligations. 54 Defendants
denied Plaintiffs’ request.55 The Motion followed on July 22. 56
Plaintiffs contend that by searching and then refusing to turn over the
Albavision Emails, Defendants violated Plaintiffs’ attorney-client privilege under
Delaware and Argentine law. 57 Plaintiffs claim that Lynch had an expectation of
privacy in albavision.tv emails between himself and the Attorneys (the “Albavision
Emails”).58 Plaintiffs further contend that Albavision Emails reflecting legal advice
the Attorneys gave Lynch in his personal capacity are privileged.
Defendants argue that Plaintiffs did not have any expectation of privacy in
emails they sent and received on Televideo’s albavision.tv server, knowing that
50
Mot. ¶ 8; Varela Aff. ¶ 4(b); Second Lima Aff. ¶¶ 8–9.
51
Varela Aff. ¶ 4(b); D.I. 62 at 1 n.2.
52
Mot. ¶ 7.
53
Id.
54
Id.; D.I. 85 at 4.
55
Mot. ¶ 7.
56
D.I. 56.
57
Mot. ¶ 2.
58
Id. ¶¶ 8, 20. When referring in this letter to emails “between Lynch and the Attorneys”
or “between Lynch and Lambert or Landaburu,” I intend to refer to any emails between
Lynch and Lambert, Lynch and Landaburu, or any combination of the three in which
counsel provided Lynch with legal advice.
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Gonzalez and Televideo could access and control those emails. 59 Defendants
contend that under In re Asia Global Crossing, Ltd.,60 as adopted and developed by
In re Information Management Services, Inc. Derivative Litigation,61 the Albavision
Emails are not confidential to Lynch or the Attorneys; that, as a result, Lynch cannot
assert any privilege over the Albavision Emails; and that Defendants are not required
to give Lynch the Albavision Emails. 62
The parties briefed the Motion, and on August 23, I held a telephonic
conference.63 I asked the parties to submit supplemental memoranda analyzing the
Asia Global factors with respect to the Albavision Emails in Gonzalez’s possession,
custody, and control.
Thereafter, an onslaught of discovery disputes ensued regarding the
Albavision Emails and other issues. On September 16, Defendants filed six
discovery motions. 64 That same day, Defendants filed a memorandum of law
providing their analysis of the Asia Global factors. 65 Also on September 16,
Plaintiffs filed an omnibus discovery motion.66 On September 17, Defendants filed
another discovery motion.67 On September 23, Plaintiffs filed an omnibus
answering brief and Asia Global memorandum, 68 and Defendants filed an omnibus
59
See generally D.I. 62, 85, 101. Defendants refused to allow Plaintiffs to access the
Albavision Emails. In support, Defendants stated that the albavision.tv email address is “a
work email, over which Mr. Lynch has no claim;” that use of a “work email” constituted
waiver of any privilege between Lynch and Landaburu or Lambert; and that “Mr. Lynch
abandoned this email address and the information contained therein.” D.I. 56, Ex. B (Letter
dated July 15, 2019). Defendants stated that, because of Gonzalez’s control over the
albavision.tv server, “[w]ell before the start of this litigation, the Defendants reviewed
information contained in the albavision server.” D.I. 62 at 1 n.2.
60
322 B.R. 247 (Bankr. S.D.N.Y. 2005).
61
81 A.3d 278 (Del. Ch. 2013).
62
See D.I. 85 at 8–14.
63
D.I. 56, 62, 63, 69.
64
D.I. 79, 80, 81, 82, 84, 86.
65
D.I 85.
66
D.I. 87.
67
D.I. 88.
68
D.I. 94.
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answering brief. 69 On September 30, Plaintiffs and Defendants filed their respective
reply briefs.70 The parties submitted competing affidavits from Argentine attorneys,
which referred and cited to various Argentine laws. 71
On October 15, I held a telephonic conference on the various discovery
motions and the parties’ Asia Global analyses.72 I resolved the discovery motions
and shared my thoughts on the majority of the Asia Global and Information
Management analysis. I took under advisement the question of whether Argentine
law applies and, if so, whether an applicable Information Management statutory
override exists under Argentine law. I also requested translations of the Argentine
laws the parties relied on, which Plaintiffs submitted on October 17.73 I granted
Plaintiffs’ motion in a brief letter opinion on October 18. 74 My reasoning follows.
II. Analysis
Delaware Rule of Evidence 502 establishes the scope of attorney-client
privilege, limiting protection to “confidential communications” between a lawyer
and client for the purpose of facilitating legal services. 75 “A communication is
‘confidential’ if not intended to be disclosed to third persons other than those to
whom disclosure is made in furtherance of the rendition of professional legal
services to the client or those reasonably necessary for the transmission of the
communication.”76 “A party’s subjective expectation of confidentiality must be
69
D.I. 93.
70
D.I. 101, 102.
71
Those affidavits are identified and discussed at length infra.
72
D.I. 109, 146.
73
D.I. 110. Defendants also submitted translations on October 18, after I had issued my
letter opinion ruling on the Motion. D.I. 112. The timing and substance of Defendants’
submission does not affect or change my ruling on this Motion.
74
D.I. 111. Since that time, the parties continued to battle over the scope of discovery and
Defendants’ entitlement to access the Albavision Emails. I have repeatedly informed the
parties that, in accordance with my ruling on this Motion, Defendants were not permitted
to access Lynch’s Albavision Emails with the Attorneys regarding his ownership interest
in Belleville. See D.I. 121, 125.
75
D.R.E. 502(b).
76
Id. 502(a)(2).
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objectively reasonable under the circumstances.” 77 “The burden of proving that the
privilege applies to a particular communication is on the party asserting the
privilege.”78
To resolve the Motion, I must determine whether the Albavision Emails
between Lynch and the Attorneys could be confidential, where they were made using
work email addresses that the authors knew could be accessed by non-employer third
parties, namely Gonzalez and Televideo. If I find that the Albavision Emails are
confidential communications under Rule 502, then the attorney-client privilege may
attach.
Vice Chancellor Laster considered a similar issue in Information
Management. In that case, the motion to compel asserted that because employees
used their employer email accounts to communicate with counsel, the emails were
no longer confidential communications under Rule 502.79 The employer controlled
and could freely access the employees’ emails. Vice Chancellor Laster recognized
that “Delaware courts have not addressed whether an employee has a reasonable
expectation of privacy in a work email account.” 80 For guidance, the Court looked
to and adopted the United States Bankruptcy Court for the Southern District of New
York’s reasoning in Asia Global.81
Asia Global recognized that “under United States Supreme Court precedent,
an employee can have reasonable expectation of privacy in areas such as the
employee’s office, desk, and files, but that the ‘employee’s expectation of
privacy . . . may be reduced by virtue of actual office practices and procedures, or
by legitimate regulation.’” 82 “Although e-mail communication, like any other form
of communication, carries the risk of unauthorized disclosure, the prevailing view is
77
Info. Mgmt. Servs, 81 A.3d at 285.
78
Id. (quoting Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992)).
79
Id.80
Id.81
Id. at 286–87.
82
Id. at 286 (alteration in original) (citations omitted) (quoting Asia Glob. Crossing,
322 B.R. at 257).
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that lawyers and clients may communicate confidential information through
unencrypted e-mail with a reasonable expectation of confidentiality.” 83
In the ordinary course of business, employees who send
communications within the company over the employer’s email system
can reasonably expect that outsiders will not be able to access the
system. Consequently, “[a]ssuming a communication is otherwise
privileged, the use of the company’s e-mail system does not, without
more, destroy the privilege.”84
“[W]hether the employee has a reasonable expectation of privacy must be
decided on a case-by-case basis.” 85 Under Asia Global, the Court considers four
factors to determine whether an employee has a reasonable expectation of privacy,
and thus confidentiality, in his work email:
(1) does the corporation maintain a policy banning personal or other
objectionable use, (2) does the company monitor the use of the
employee’s computer or e-mail, (3) do third parties have a right of
access to the computer or e-mails, and (4) did the corporation notify the
employee, or was the employee aware, of the use and monitoring
policies? 86
As explained in the October 15 teleconference, the four Asia Global factors
suggest that the Albavision Emails are not confidential to Lynch. 87 But my inquiry
does not end with the four Asia Global factors. In Information Management, Vice
Chancellor Laster recognized a potential statutory override of the Court’s Asia
Global analysis. 88 If a controlling jurisdiction has a statute on the confidentiality of
83
Asia Glob. Crossing, 322 B.R. at 257.
84
Info. Mgmt. Servs., 81 A.3d at 286 (alteration in original) (citations omitted) (quoting
Asia Glob. Crossing, 322 B.R. at 251).
85
Id. (quoting Asia Glob. Crossing, 322 B.R. at 257).
86
Id. at 286–87 (quoting Asia Glob. Crossing, 322 B.R. at 257).
87
D.I. 146 at 22–25.
88
Info. Mgmt. Servs., 81 A.3d at 292.
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work emails, that statute may alter the common law results of the Asia Global
analysis.89
As an initial matter, I note that I focused my Asia Global analysis on
Televideo because Televideo controls the server hosting the Albavision Emails and
is the entity that seeks to access them. In Information Management, the company
that employed the individuals asserting privilege also controlled the email server and
posed the threat of access. 90 The facts here are more complicated than a standard
employee-employer relationship. The Company employees asserting privilege use
work email hosted on a server owned, controlled, and reviewed by a different entity.
Lynch and the Attorneys work for Telearte and other direct and indirect Belleville
subsidiaries. Those entities do not control the albavision.tv server and do not present
the threat to confidentiality at issue. Rather, the server is controlled by Televideo, a
stranger to the employment relationship between the Company on one hand, and
Lynch and the Attorneys on the other. The access that threatens the confidentiality
of the Albavision Emails is not from the Company, but from Gonzalez and
Televideo.
The first step in the Information Management statutory override analysis is to
determine which sovereign may provide a statutory override. 91 Information
Management involved a Delaware corporation conducting business in Maryland.
Because the company conducted its business in Maryland, Vice Chancellor Laster
looked to Maryland law and federal law, as “the federal government and the State of
Maryland [were] the sovereigns whose law [the corporation] must follow when
dealing with its employees’ email.” 92
I apply the same reasoning here to determine which sovereign’s laws govern
Televideo’s administration of its server. 93 Televideo has custody of the emails in
89
Id. at 292–96.
90
Id. at 284.
91
Id. at 292.
92
Id.93
The parties dispute which sovereign’s laws might provide a statutory override, but focus
their dispute on Belleville—not Televideo. Plaintiff asserts Argentine law applies because
Belleville primarily conducts business in Argentina and because the employees using the
server all reside in Argentina. See, e.g., D.I. 94 at 17–19. Defendants primarily look to
Delaware law because Belleville is incorporated here. For a time, Defendants asserted
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question and is the entity that would have to comply with the law of its sovereigns
in handling those emails. I consider the place where Televideo “conducts its
business” to identify the sovereign that governs the entity’s control and use of the
emails.94
Televideo is a Florida corporation with its formal principal place of business
in Florida. Televideo is part-owner of Belleville. Gonzalez and Televideo control
the Albavision brand, which operates throughout Latin America. Although the
parties have not clearly articulated the nature of Televideo’s business, Plaintiffs refer
to Televideo as a “service provider.” 95 Televideo provided services for a fee to
Belleville’s subsidiary, including email service using the domain albavision.tv and
hosting emails on that server.96 Televideo owns and controls the Albavision server,
which is physically located in Florida. 97
By supplying an email service to a Belleville subsidiary’s Argentine
employees located in Argentina, Televideo had an obligation to abide by Argentine
law with respect to services provided in that country. Thus, Televideo conducts its
business, at least in relevant part, in Argentina. Under Information Management, I
conclude that Argentine law must be the source of any statutory override.
The next step is to determine whether Argentine law provides a statutory
override of my Asia Global analysis. “In cases where foreign law may be applicable,
the party seeking the application of foreign law has the burden of not only raising
the issue that foreign law applies, but also the burden of adequately proving the
Florida law governed Belleville’s operations, but in Defendants’ final brief on this issue,
they abandoned reliance on Florida law and argued only that “the cited Argentine law
should not apply to the question of privilege in this case and should be resolved pursuant
to Delaware law given that Belleville is a Delaware corporation.” D.I. 101 at 7. The
parties’ reliance on Belleville is misplaced. Televideo controls and can access the allegedly
privileged Albavision Emails, so Televideo is the focus of my statutory override analysis.
Defendants have made no argument as to whether Florida, Delaware, or Argentine law
should govern Televideo’s operations. Similarly, Plaintiffs do not consider Televideo
when contending the laws of any specific sovereign apply on this Motion.
94
Info. Mgmt. Servs., 81 A.3d at 292.
95
D.I. 94 at 11, 13.
96
Id. at 9.
97
D.I. 85 at 4–5.
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substance of the foreign law.” 98 Plaintiffs argued, and I agree, that Argentine law
governs this dispute. Because Plaintiffs seek its application, Plaintiffs have the
burden of proving the substance of any potential statutory override under Argentine
law. I look to the affidavits of the parties’ Argentine legal experts, as well as the
translations of the laws they cite, to determine whether Plaintiffs have met their
burden of demonstrating that a statutory override exists under Argentine law. 99 I
conclude Plaintiffs have done so.
Relying on Article 18 of the Argentine Constitution, Article 1770 of the
Argentine Civil and Commercial Code, and Article 153 of the Argentine Criminal
Code, 100 Plaintiffs state:
Under Argentinean law and jurisprudence, corporate emails are
expected to be treated with the same degree of privacy as personal
emails, unless the employee has been duly notified by the employer that
the exchange of emails through the company’s server could be
monitored and the employee has expressly accepted such monitoring.
Otherwise, it could be construed that the employee, even when using
corporate emails, has a reasonable expectation of privacy. 101
Defendants contend that “Argentina has established that there are no absolute
rights” and that the “right to privacy is [] not absolute and it does recognize many
basic limitations”:102
98
Vichi v. Koninklijke Philips Elecs., N.V., 85 A.3d 725, 765 (Del. Ch. 2014) (quotation
omitted); see also Otto Candies, LLC v. KPMG LLP, 2019 WL 994050, at *16
(Del. Ch. Feb. 28, 2019).
99
See Vichi, 85 A.3d at 766–78; see also Otto Candies, 2019 WL 994050, at *24–27.
100
Varela Decl. ¶ 6.
101
Id. ¶ 5.
102
D.I. 101, Ex. C ¶ 8 (emphasis in original) [hereinafter “Massot Aff.”].
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
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November 18, 2019
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The legal system of the Republic of Argentina recognizes the
inviolability of correspondence and the right to privacy in general
terms . . . and . . . there are some basic statu[t]es, such as article 1770
of the Civil and Commercial Code and article 153 of the Criminal Code
that impose civil duties and/or criminal penalties to those who
arbitrarily interfere with the private life of other people. This general
principle, however, is not absolute and it is subject to a number of
limitations . . . . 103
Arguing that access “to the e-mails could be allowed for the legitimate defense of
Defendants’ rights,”104 and that Argentine courts permit access into private
communications, such as emails, under certain circumstances, Defendants rely on
Article 326 of the Argentine Civil and Commercial Procedural Code and Article 234
of the Argentine Criminal Procedural Code.105 Defendants also rely on Law 27.078,
under which the Argentine Federal Congress declared the inviolability of emails. 106
Under Article 18 of the Argentine Constitution, “[t]he residence may not be
trespassed, nor may the written correspondence and private papers be violated.”107
Thus, the Argentine Constitution protects an individual’s right of privacy in “written
correspondence and private papers.” 108
Argentine laws indicate this right is expansive. Argentine Law 27.078
guarantees the inviolability of email correspondence that “induces the user to assume
the privacy thereof.” 109 It does so when the user would assume that the
communication, such as an email, is private, and states that, in such circumstances,
the communication can only be intercepted at the request of the judiciary:
103
Id. ¶ 4 (emphasis in original).
104
Id. ¶ 10.
105
Id. ¶ 11.
106
Id. ¶ 7.
107
D.I. 110, Tab 1.
108
Id.
109
D.I. 110, Tab 4.
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Correspondence, understood as any communication that is made
through Information Technology and Communications (ICT),
including traditional postal mail, email or any other mechanism that
induces the user to assume the privacy thereof and that of the traffic
data associated therewith, made through telecommunications networks
and services, is inviolable. Their interception, as well as their
subsequent registration and analysis, will only proceed at the request of
a competent judge. 110
Law 27.078 is “applicable throughout the territory of Argentina and at places under
its jurisdiction.”111
Article 1770 of the Argentine Civil and Commercial Code, and Article 153 of
the Argentine Criminal Code, further delineate the bounds of Argentina’s
constitutional guarantee. Article 1770 of the Argentine Civil and Commercial Code
provides for “[p]rotection of private life,” stating “[t]he person who arbitrarily
meddles in the life of others . . . shares written correspondence, . . . or in any way
disturbs their privacy, must be forced to cease in such activities . . . .” 112 As a
corollary, Article 153 of the Argentine Criminal Code provides that one who
“unduly” or “improperly” opens the communications of another will be punished.113
Both laws prohibit others from “arbitrarily,” “unduly,” or “improperly” disturbing
an individual’s constitutional expectation of privacy in his written correspondence.
In a similar vein, Articles 326 and 234 carve out circumstances in which a
third party, such as an employer, can request that the Argentine Courts or opposing
party in litigation provide access to another’s written correspondence, such as email.
Both are procedural rules that parties or an Argentine Court may invoke during the
lifetime of a case. Article 326 permits a litigant to request that a party produce
documents before trial, as long as the requesting litigant is “justified” in believing
production at trial would be “impossible or very difficult.”114 In criminal cases,
Article 234 permits a judge to require production of correspondence, such as work
110
Id.
111
D.I. 110, Tab 8.
112
D.I. 110, Tab 2 (emphasis added).
113
D.I. 110, Tab 3.
114
D.I. 110, Tab 6.
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email: “Whenever it is considered useful for the verification of the crime, the judge
may order . . . the interception and seizure of postal or telegraphic correspondence
or of any other instrument sent by the defendant or addressed thereto . . . .” 115
To rebut the broad guarantee of privacy under the Argentine Constitution,
Defendants point to Law 27.078 and Articles 326 and 234, which permit “proper”
or otherwise justified invasion of an individual’s written correspondence in certain
circumstances. But in my view, none of those exceptions cover Defendants’ access
to the Albavision Emails, where Lynch and the Attorneys were aware that non-
employers Televideo and Gonzalez controlled the albavision.tv server; where there
was no policy related to the access, use, or monitoring of emails on that server;116
and where individuals with albavision.tv email addresses, including Lynch and the
Attorneys, believed Argentine privacy protections shielded their correspondence.117
Specifically, Law 27.078, Article 326, and Article 234 permit another to access an
individual’s written correspondence only when the individual voluntarily produces
the correspondence during litigation or when an Argentine Court orders production.
Neither circumstance is met here.
After weighing the experts’ affidavits and reviewing the remainder of the
submitted authority, I conclude that under Argentine law, Plaintiffs had a reasonable
expectation of privacy in the Albavision Emails. Plaintiffs have demonstrated that
the Argentine Constitution and other Argentine laws establish that an individual has
a broad right of privacy in his written correspondence, especially when the
individual would assume that the correspondence would remain private or when
another’s interception of the correspondence would be improper. 118 Plaintiffs have
demonstrated that Argentine law would permit Defendants to access and review the
115
D.I. 110, Tab 7.
116
See D.I. 94, App. A396–97, A401, A404, A407.
117
See id. at A397, A401, A404, A407; see also D.I. 102 at 13 n.7.
118
While Plaintiffs also rely on Resolution 333/2001, I do not consider that source.
Resolution 333/2001 was never enacted by the Argentine Federal Congress and “never
generated legal effects.” D.I. 110 at 2; Massot Aff. ¶¶ 5–6. Plaintiffs assert that the
Resolution proposed a rule making emails equivalent to other types of correspondence, and
that its legal import comes from subsequent common law adoptions of that rule.
D.I. 110 at 2. Plaintiffs do not identify the adopting decisions or provide documents from
the adopting Courts. Therefore, Plaintiffs have failed to demonstrate that the principle
stated in Resolution 333/2001 governs this Motion.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
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Albavision Emails if doing so would not have been arbitrary, undue, or improper.
At the same time, Defendants have demonstrated that, under Argentine law, the
“right to privacy is [] not absolute” and “recognize[s] many basic limitations.”119
But Defendants have failed to demonstrate that their interference and intrusion into
the Albavision Emails is proper, particularly under the Argentine Constitution’s
broad privacy guarantee.
Plaintiffs have proven that the substance of the Argentine law I must apply on
this Motion provides a statutory override of my Asia Global analysis. Lynch and
the Attorneys had rights of privacy in the Albavision Emails under Argentine law.
Accordingly, the Albavision Emails are “confidential communications” under Rule
502. And so, the Albavision Emails are privileged to the extent that they contain
communications between Lynch and the Attorneys (or any other attorney
representing Lynch in his personal capacity) related to Lynch’s personal legal
matters and unrelated to his status as a Belleville co-manager. This includes all such
emails stored on the albavision.tv server before Lynch migrated the emails to the
Telearte server in 2018. More specifically, Defendants may not access any
Albavision Emails in which Lynch sought or obtained personal legal advice
regarding his acquisition of sixty-five percent of Belleville.
In the weeks since our October 15 teleconference and my October 18 letter,
Defendants have continued to assert that they are entitled to Albavision Emails sent
before a reasonable expectation of adversity between Lynch and Gonzalez arose in
February 2018.120 I have addressed this topic several times and in various forms,
but I will again attempt to clarify my rulings. 121 I previously determined Defendants
could access pre-migration emails between Lynch and counsel that are related to
119
Massot Aff. ¶ 8.
120
See, e.g., D.I. 148 at 8 (“As part of the October 15 Ruling, this Court opined that there
was not reasonable knowledge of adversity between Messrs. Lynch and Gonzalez, until
February 2018. . . . Plaintiffs served Defendants with their Supplemental Privilege Log on
October 21, 2019 . . . in which they assert that certain attorneys who were advising GBH
and Messrs. Gonzalez and Lynch regarding the very transactions at issue in this case
somehow were simultaneously wearing another hat in which they also represented
Mr. Lynch in a personal capacity for the very same transactions. This position is
inconsistent with the Court’s ruling that Mr. Gonzalez had no reasonable expectation of
adversity relative to Messrs. Lynch, Lambert and Landaburu until February 2018.”).
121
D.I. 146, 125, 121, 111.
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Lynch’s status as co-manager, based on In re CBS Corporation Litigation 122 and
Kalisman v. Friedman. 123 Defendants are permitted to access and review any pre-
migration Albavision Emails between Lynch and counsel, in-house or otherwise,
that (1) are unrelated to Lynch’s personal legal matters, such as his acquisition of
sixty-five percent of Belleville; (2) are related to Lynch’s role as Gonzalez’s co-
manager and their work for Belleville; and (3) were sent before Gonzalez had reason
to believe that there was adversity between himself and Lynch or the Attorneys.
Defendants may not access pre- and post-migration emails between Lynch
and counsel that related to Lynch’s personal legal matters, such as his Belleville
acquisition. Further, Defendants cannot access any post-migration emails that were
sent after Lynch named himself Belleville’s sole manager in 2018 and that are stored
on the Telearte server, even to the extent those emails relate to Lynch’s role as
Belleville’s manager. At the time Lynch and the others began using the Telearte
server, Gonzalez had a reasonable expectation of adversity and did not have a
reasonable expectation of shared client status, rendering post-migration emails
confidential to Lynch.
III. Conclusion
I hope this letter finalizes the privilege dispute and helps the parties efficiently
conclude discovery. The Motion is resolved in Plaintiffs’ favor. This issue provides
no basis to postpone trial, as requested in Defendants’ pending Omnibus Motion to
Compel Production and for an Amendment to the Case Schedule to Allow Sufficient
Time for the Completion of Discovery, filed November 5, 2019.124 I intend to
122
2018 WL 3414163 (Del. Ch. July 13, 2018).
123
2013 WL 1668205 (Del. Ch. Apr. 17, 2013). On the October 15 call, I noted that
Kalisman provides that privileged information can be withheld from one fiduciary upon
sufficient existing adversity only where that director no longer has a reasonable expectation
that he was client of the shared counsel. D.I. 146 at 11; see Kalisman, 2013 WL 1668205,
at *5. I opined that “there’s been no showing that Mr. Gonzalez had no reasonable
expectation of a shared client status with Mr. Lynch until February of 2018” and that “[i]t
is the plaintiffs’ burden to show that adversity to trigger withholding documents as between
the co-managers, per CBS.” D.I. 146 at 12; see CBS, 2018 WL 3414163, at *5.
124
D.I. 148.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
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address the remainder of Defendants’ Omnibus Motion at the pre-trial conference
tomorrow, November 19.
To the extent an order is required to implement this decision, IT IS SO
ORDERED.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record via File & ServeXpress