In The Police and Fire Retirement System of the City of Detroit v. Elon Musk, C.A. No. 2020-0477-KSJM, 2023 WL 1525022 (Del. Ch. Jan. 31, 2023), Chancellor Kathleen St. Jude McCormick addressed the scope of the attorney-client privilege in the context of communications between corporate directors and third-party advisers. The chancellor’s letter decision also addressed whether perceived adversity voided the privilege in an exchange between a director and in-house counsel concerning the director’s compensation and provided the litigants with practical suggestions to consider in resolving outstanding privilege disputes.

In this stockholder derivative action, the plaintiff claimed that the defendants—members of Tesla’s board of directors—breached their fiduciary duties by awarding themselves excessive and unfair compensation between 2017 and 2020. The plaintiff filed a motion to compel information withheld by the defendants on the ground of attorney-client privilege. Following a hearing on the motion and in camera review of certain documents, the chancellor granted the motion in part and denied it in part.