Hurd v. Espinoza and Hewlett-Packard Company, No. 167, 2011 (Del. Supr., Dec. 28, 2011; corrected on Dec. 29, 2011), read Delaware Supreme Court opinion here. The 
Chancery decision appealed from was highlighted on these pages here. The New York Times online article about this Supreme Court decision is available here. The separate Delaware Supreme Court decision last month addressing the underlying Section 220 issues in this case was summarized on this blog here.
Issue Addressed: The issue addressed in this decision was whether a particular document filed with the Court should be kept under seal pursuant to Court of Chancery Rule 5(g). That document was a letter that included sundry allegations against the former CEO of Hewlett-Packard Co., which eventually led to his resignation.
Brief Overview and Background
Although the extensive media coverage regarding the document sought to be kept under seal in this matter focused on the aspects of the issue that are commonly found in tabloids, for purposes of corporate litigation, the Delaware Supreme Court appropriately focused on the issue of whether the prerequisites of Rule 5(g) were satisfied in order to maintain a document under seal (i.e., to keep it from public access).
The document sought to be kept under seal was a letter about the former CEO of Hewlett-Packard that was attached as an exhibit to the complaint filed in this case under DGCL Section 220 to obtain books and records of Hewlett-Packard Company. At the time, Mark Hurd was the CEO of Hewlett-Packard (“HP”), until a lawyer for a former girlfriend of Hurd sent a letter alleging improper behavior which led to the resignation of Hurd as the CEO of HP. That letter is the subject of this decision. Although neither the shareholder who filed the §220 action nor HP regarded the letter as confidential, Hurd intervened in this case to argue that the letter was confidential and should be kept under seal and not revealed to the public (even though it was filed as part of the Section 220 lawsuit). The Court of Chancery, in a 71-page opinion released in March, explained why the details of the letter, however embarrassing, should not remain under seal (for the most part), even based on California law, which is the primary basis on which Hurd sought to maintain its confidentiality.
Analysis
The Delaware Supreme Court did not rely on California law and instead affirmed the trial court based on an analysis of Court of Chancery Rule 5(g), which describes the prerequisites that must be satisfied in order to maintain a document under seal when it is filed with the Court. In a pithy decision, Delaware’s High Court explained in a businesslike manner that in order to place a document under seal that has been made part of the public record, and in order to justify a denial of public access to that document, “good cause” must be established. “Good cause” has been found to be a basis to seal documents when the documents contain trade secrets, non-public financial information, and third-party confidential material. Information that is “mildly embarrassing” does not suffice to protect it from disclosure. See In Re Yahoo!, Inc. S’holders Litig., 2008 WL 2268354 (Del. Ch.); Romero v. Dowdell, 2006 WL 1229090 (Del. Ch.); Khanna v. McMinn, 2006 WL 1388744 (Del. Ch.).
The Court explained that the letter at issue did not contain any trade secrets, non-public financial information or other proprietary information. Therefore, the limited issue before the Court was whether the letter contained any third-party confidential information. The Court reasoned that even if the letter contains some embarrassing detail about the behavior of Hurd, it does not describe any intimate conversations or conduct, and was sent to Hurd in his capacity as the CEO of HP at the company’s address, and involved claims against both HP and Hurd.
In affirming the decision of the Court of Chancery (in a decision that was only 10% as long), the Court also observed that most of the claims made in the letter were already widely reported in “virtually every media.”