In re Oracle Corp. Derivative Litig., C.A. No. 2017-0337-SG (Del. Ch. July 9, 2020)
After investigating certain potential derivative claims arising out of Oracle Corporation’s acquisition of NetSuite, Inc., and after trying unsuccessfully to settle those claims, Oracle’s Special Litigation Committee (“SLC”) agreed that permitting a derivative plaintiff to pursue those claims was in Oracle’s best interests. This opinion concerns the lead derivative plaintiff’s subsequent motion to compel, which sought the production of forty-two documents the SLC withheld on work product grounds. The documents at issue were the SLC’s counsel’s notes and memoranda of witness interviews, factual summaries prepared by the SLC’s counsel, counsel’s draft report to the SLC, and financial analyses and damages models prepared by or at the direction of the SLC’s counsel. The Court found that all forty-two documents were protected work product because they were created in anticipation of litigation in order to aid the SLC in connection with this action. In addition, the documents were afforded a higher degree of protection as opinion work product because they also reflected attorney thoughts and impressions.
While some work product may be discoverable upon a showing of need, here the Plaintiff failed to show that it was unable without undue hardship to obtain the substantial equivalent of the information contained in the protected documents by other means. The Plaintiff had received the underlying documents the SLC considered in preparing its work product, and it would be able to depose the persons the SLC had interviewed. The fact that the Plaintiff might be deprived of potential impeachment materials (i.e., prior statements of witnesses) was not sufficient, as the standard for unavailability requires that the party seeking to compel the materials not have an alternative source for the underlying factual information.
The Court also found that the SLC did not waive the work product protection when it included some of the information from the protected documents in its mediation statement. Although the SLC’s mediation statement was provided in mediation to the targets of its investigation, the parties had a reasonable expectation of privacy during the mediation proceedings when the disclosures were made.
Finally, in answering the question of whether the SLC’s refusal to share the logged items was a breach of fiduciary duty, the Court held that decision was not reviewable under the two-part Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981) standard that applies when a special litigation committee recommends dismissal of a derivative suit. Instead, in making the decision to assert work product protection over its documents, the SLC retained the standard presumption of business judgment. The Court found that the SLC may have had good faith reasons to keep its work product confidential and, therefore, the Plaintiff’s attack on the SLC’s business judgment failed.
