Submitted Date: August 13, 2019
Trainer, Jr., Esquire, Marie M. Degnan, Esquire, Aaron P.
Sayers, Esquire Ashby & Geddes
E. Czeschin, Esquire Susan M. Hannigan, Esquire John M.
O'Toole, Esquire Tyre L. Tindall, Esquire Richards,
Layton & Finger, P.A.
letter opinion resolves Plaintiff's Motion to Compel in
which Plaintiff seeks to compel Defendant, Turvo, Inc.
("Defendant" or "Turvo"), to produce
attorney-client privileged communications between Latham
& Watkins, LLP ("Latham") and Turvo's
Preferred Directors,  officers or employees that occurred any
time prior to a May 21, 2019 meeting where the Turvo board of
directors (the "Board") purported to remove
Plaintiff as Turvo's CEO. For the reasons stated below, the
motion is denied.
Eric Gilmore, is the co-founder and majority shareholder of
Turvo and has served as Chief Executive Officer of the
company since its inception.During the relevant time period,
Turvo's Board consisted of four members- Gilmore, Ajami,
Chan and Sarracino.
2019, during a review of expenses charged to company credit
cards, Turvo's Chief Financial Officer discovered that
Mr. Gilmore had used his card to expense at least $125, 000
in entertainment charges, including (allegedly) $76, 120 paid
to adult entertainment venues. The CFO alerted Chan to the
charges, who then notified Ajami and Sarracino.
advice on how to proceed in light of the alleged misconduct
of one of their fellow Board members, the Preferred Directors
turned to Latham instead of the Board's long-time
counsel, Gunderson Dettmer Stough Villeneuve Franklin &
Hachigan, LLP. Latham had previously served as counsel
for Activant, a Turvo preferred stockholder, and had never
represented Turvo or the Board. In the following weeks, with
Latham's guidance, the Preferred Directors reviewed the
information relating to Mr. Gilmore's alleged misconduct,
assessed the impact the misconduct had or would have on
Turvo's business and considered how to
21, 2019, the Preferred Directors, Mr. Gilmore, counsel for
Mubadala Ventures (a preferred stockholder) and four Latham
attorneys attended a meeting at Ajami's office in San
Francisco. After explaining that the purpose of the
meeting was to address Mr. Gilmore's alleged misconduct,
it is alleged that Sarracino asked Mr. Gilmore to recuse
himself from the meeting. In Mr. Gilmore's absence,
the Preferred Directors removed Mr. Gilmore as CEO and
adopted a resolution retaining Latham as counsel for the
Board "effective as of May 10, 2019." According to
Defendant, the resolution's retroactive language was
intended to allow Turvo to pay the legal fees incurred by the
Preferred Directors prior to the May 21 meeting.
Gilmore contends that, as a member of the Board during
Latham's engagement by other members of the Board, he is
entitled to access Latham's privileged communications
with the Preferred Directors and any Turvo officers or
employees. While he acknowledges the Board did not
formally engage Latham prior to the May 21 meeting, Mr.
Gilmore asserts that Latham functionally served as counsel to
the Board by advising the Preferred Directors.
support of his position, Mr. Gilmore points out that the
plain language of the May 21 resolution makes clear that
Latham's service to the Board began on May 10 and gives
no indication that the purpose of backdating the resolution
was to clarify billing protocols as Defendant now
suggests. He maintains that contemporaneous email
communications as well as deposition testimony indicate that
the Preferred Directors believed Latham was acting as counsel
to the Board. Specifically, Mr. Gilmore cites an email dated
May 22, 2019, in which Sarracino told a Turvo investor,
"The board worked around the clock for the last
two weeks to fix what was an extremely unfortunate
situation." Chan's recent deposition testimony
also purportedly reveals that the Preferred Directors did not
retain counsel prior to the May 21 meeting, that Latham did
not represent Chan personally and that Chan and Ajami each
had their own counsel.
Mr. Gilmore argues that Latham made certain representations
that reveal its role as counsel to Turvo and the Board. For
example, in the minutes from the May 21 meeting, which Latham
drafted, Latham characterized its work as conducting an
"internal investigation." Additionally, in an email
to Mr. Gilmore dated May 22, 2019, Latham's Joseph B.
Farrell referred to himself "as counsel to the Special
Committee of the Board of Directors," even though that
committee was not formed until May 23, 2019.
carefully reviewed Mr. Gilmore's proffered evidence, I
see no basis to conclude that Latham served as counsel to the
Board before the May 21 Board meeting such that Mr. Gilmore
should be given access to the privileged communications
between the Preferred Directors, the preferred stockholders
and their chosen counsel. Without this predicate
attorney-client relationship between Latham and the Board,
Mr. Gilmore is an outsider to the relationship and has no
right to pierce or otherwise enter it.
general matter, a Delaware corporation "cannot assert
the privilege to deny a director access to legal advice
furnished to the board during the director's
tenure." Mr. Gilmore correctly acknowledges three
exceptions to the rule, and argues that because none of them
applies, he is entitled to discover the disputed
communications. But there is an important condition to
Mr. Gilmore's purported entitlement: that Latham's
legal advice be "furnished to the