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In re Oracle Corp. Derivative Litig.

Court of Chancery of Delaware

November 7, 2019, Submitted; December 4, 2019, Decided

C.A. No. 2017-0337-SG

Opinion

MEMORANDUM OPINION

GLASSCOCK, Vice Chancellor

In the cryptozoological division of equity's menagerie are a number of rarae aves and chimeras—some, perhaps, not so chimerical as once thought.1 One unusual denizen2 is on display here. A stockholder brought a purported [*3]  derivative action, alleging that insiders had structured an acquisition unfair to the corporation. The action withstood a motion to dismiss, and the corporation formed a special litigation committee of the board to evaluate the claim. I then stayed the matter for several months, to allow the special litigation committee, assisted by its own counsel, to consider the cause of action. Ultimately, the special litigation committee found that it was in the corporate interest that the cause of action be pursued, and determined that that asset would best be monetized on behalf of the corporation by allowing the original plaintiff to proceed, derivatively.

The corporate asset, the cause of action, was thus returned to the Plaintiff on the corporate behalf. These unusual circumstances present, for consideration here, unusual questions: does the litigation asset transferred by the special litigation committee to the Plaintiff include the documents made available to or relied on by the special litigation committee? If so, to what extent, and subject to what (and whose) privileges?3 I find that the litigation asset was enhanced by the review of the special litigation committee, and that [*4]  documents relied on by that committee pertain to the asset and must be available to the derivative Plaintiff as fiduciary for the corporation designated by the special litigation committee, subject to the privileges and immunities that may be raised by the individual Defendants and the special litigation committee in its business judgement. My rationale, in the context of cross discovery Motions, is below.

I. BACKGROUND4

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2019 Del. Ch. LEXIS 1381 *; 2019 WL 6522297

IN RE ORACLE CORPORATION DERIVATIVE LITIGATION

Notice: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

Prior History: In re Oracle Corp. Derivative Litig., 2018 Del. Ch. LEXIS 92 (Del. Ch., Mar. 19, 2018)

CORE TERMS

documents, communications, Subpoenas, acquisition, discovery, derivative, fiduciary, individual defendant, amended complaint, attorney-client, original complaint, total compensation, best interest, privileged, mediation, parties, stockholder, entity, interviews, derivative claim, circumstances, settlement, negotiations, privileged document, Motions, Nominal, futile, corporate interest, relevant documents, motion to dismiss

Civil Procedure, Discovery & Disclosure, Discovery, Relevance of Discoverable Information, Business & Corporate Law, Actions Against Corporations, Derivative Actions, Enforcement of Corporate Rights, Standing, Demands, Futility, Procedural Matters, Shareholder Actions, Derivative Actions, Evidence, Privileges, Attorney-Client Privilege, Elements, Scope, Privileged Communications, Attorney-Client Privilege, Exceptions, Work Product Doctrine, Scope of Protection, Waiver, Work Product Doctrine, Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Mediation, Methods of Discovery