Espinoza v. Hewlett-Packard Company, C.
A. No. 6000-VCP (Del. Ch. Mar. 17, 2011), read 70-page Court of
Chancery opinion here.
The background of this decision has been referenced in
the popular press for many months. It involves the former CEO of
Hewlett-Packard, Mark Hurd. In August 2010 he resigned as CEO amid allegations
of improper conduct regarding a former HP contractor, Jodie Fisher. A
letter to Hurd was sent by Fisher's lawyer, Gloria Allred, alleging certain
claims against Hurd and HP. A settlement was reached on August 5, 2010 and Hurd
resigned the next day.
Court of Chancery Rule 5(g) regarding confidential
filings, and the procedures and considerations relating to those filings, is
discussed in great detail and this opinion is destined to be a useful reference
for corporate litigators who need to be familiar with that rule. See, e.g.,
text accompanying footnotes 33 to 38 and 176 to 180.
This case started as a demand for books and records
pursuant to DGCL Section 220 regarding the handling of Hurd's resignation
by HP. The Court of Chancery allowed Hurd to intervene in this case in order to
allow him to argue why the Allred letter should be kept confidential. Hurd
argued that California law applied. The Court concluded that Hurd did not
demonstrate good cause why the Allred letter should be kept under seal.
Hurd claimed that the public disclosure of the Letter would violate his
"protectable legal interests" based on six different theories arising
under various California laws and statues. After a choice of law analysis, the
Court, in applying California substantive law found that Hurd failed to
demonstrate that the letter qualified for protection under California law. As a
result, the Court looked to Delaware procedural rules and in
particular Chancery Rule 5(g). However, a small portion of the letter relating
to Hurd's family was kept under seal. See footnote 85.
Bloomberg reports here
with more details and explains that Hurd will appeal the decision, but that
HP "takes no position" on the matter.
Kevin F. Brady of Connolly Bove Lodge & Hutz LLP
contributed to the highlight of this case.
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Fox Rothschild LLP.
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