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MONTH-IN-BRIEF (Dec 2019)

M&A Law

Stockholder Plaintiff Entitled to Documents Relied upon by Special Litigation Committee after Committee’s Determination that Plaintiff Should Proceed with Derivative Claims

By Sara M. Kirkpatrick 

On December 4, 2019, the Delaware Court of Chancery held that a lead plaintiff was entitled to the production of all documents and communications reviewed and relied upon by the Special Litigation Committee (the “SLC”) formed by Oracle Corporation (the “Company”) or its counsel, in connection with the SLC’s consideration of such plaintiff’s challenge to Oracle’s acquisition of NetSuite Inc.  The SLC had previously determined that (1) it was in the Company’s best interests that the lead plaintiff’s derivative action be pursued, and (2) the litigation asset (the derivative action) would be best monetized by allowing the lead plaintiff to persecute its claims.  On the lead plaintiff’s motion to compel the production of documents, the Company argued that no documents reviewed by the SLC, outside of the documents regarding the NetSuite transaction, should be produced and that the lead plaintiff should proceed as if the SLC review never occurred.  The Court rejected the Company’s arguments and found that the SLC’s review enhanced the litigation asset and it would be, in part, against the Company’s best interests to allow the lead plaintiff to continue with the litigation asset stripped of the value created by the SLC.  Thus, the Court held that in order to preserve the value of the litigation asset and because the SLC returned such litigation asset to the lead plaintiff, the documents relied on by the SLC must be made available to the lead plaintiff.

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