In re Continental Illinois Sec. Litigation

In re Continental Illinois Sec. Litigation

Opinion

 [*1304]  CUDAHY, Circuit Judge.

In this appeal we must balance the public's right of access to documents relied on as evidence in civil proceedings against a party's interest in the confidentiality -- based primarily upon the attorney-client privilege -- of its investigation into the merits of derivative suits brought on its behalf. The district court held that Dow Jones & Company, Inc. (publisher of The Wall Street Journal) and Field Enterprises, Inc. (publisher of the Chicago Sun-Times) (collectively the "Newspapers") are entitled to copies of the Special Litigation Committee Report (the "Report") compiled in connection with derivative actions pending in the district court. Because the Report was admitted into evidence in connection with [**2]  a motion pending before the district court and because the court expressly relied on the Report in reaching a tentative disposition of the motion, the public is presumptively entitled to the Report. The district court did not abuse its discretion in concluding that this presumption was not rebutted in this case. Therefore, we affirm the order of the district court granting access to the Report.

I. BACKGROUND

A. The Securities Litigation 

Appellants, Continental Illinois Corporation ("CI Corp.") and its wholly-owned subsidiary, the Continental Illinois National Bank and Trust Company of Chicago (the "Bank") (collectively "Continental"), are defendants in derivative suits and class actions in the district court. ¹ The derivative suits were brought by shareholders to compel Continental to assert claims it may have against third parties or, alternatively, to allow the shareholders to assert such claims on Continental's behalf.  CI Corp.'s board of directors formed a Special Litigation Committee ("SLC") to evaluate the various derivative claims. ] Under Delaware law, which applies because CI Corp. is a Delaware corporation, if the corporation on whose behalf a derivative suit [**3]  is brought decides, with court approval, that pursuit of the claim is not in the corporation's best interest, the action may be dismissed. ² See Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981). The SLC was formed, presumably, so that none of the directors sued in the various actions would participate in the decision whether to terminate the claims. See Maldonado, 430 A.2d at 786. 

 [**4]  CI Corp. empowered the SLC to conduct an investigation into the basis of the pending derivative actions to determine whether the actions should be dismissed as not being in the best interests of the Corporation. To assist it in this endeavor, the SLC retained the law firm of Jenner & Block and its partner, former U.S. Circuit Judge Philip W. Tone, as legal counsel. Jenner & Block, in turn, engaged Thomas A. Donahoe and the accounting firm of Price Waterhouse as its accounting consultants for investigation of allegations against Continental's independent auditors, Ernst & Whinney.

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