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.
Although only tangentially related, a noteworthy postscript to this ruling is a Brief filed in the Court of Chancery, available here, on behalf of the New York Attorney General, who intervened in a Chancery case involving Intel to argue that a Protective Order should be modified or clarified to confirm that it did not prohibit the New York Attorney General from accessing documents that may be covered by the Order but which were otherwise made available as part of the NY AG’s investigation of Intel. The Brief contains a useful collection of cases for a third-party who wants to argue that a Protective Order should not restrict its access to documents otherwise available.