No. 167, 2011 (Del. Dec. 29, 2011)
In this en banc memorandum opinion, the Delaware Supreme Court affirmed the Court of Chancery’s determination that portions of a letter relating to Jodie Fisher’s (“Fisher”) allegations that former Hewlett-Packard CEO Mark V. Hurd (“Hurd”) sexually harassed her should not remain sealed, pursuant to Court of Chancery Rule 5(g).
This appeal arose out of an action brought by the plaintiff, Ernesto Espinoza (“Espinoza”), for books and records pursuant to Section 220 of the Delaware General Corporation Law (“Section 220”) relating to Hurd’s resignation as CEO of defendant Hewlett-Packard Company (“HP”). Espinoza sent a demand for HP’s books and records relating to Hurd’s resignation in August 2010. Among the books and records HP provided Espinoza was a June 24, 2010 letter from Fisher’s attorney, Gloria Allred, to Hurd in his capacity as CEO of HP that detailed Fisher’s allegations of sexual harassment by Hurd and threatened claims against Hurd and HP (the “Allred Letter”). Both Fisher and Hurd advised HP that the Allred Letter was confidential. HP responded that it would provide the letter to Espinoza but would also mark it confidential as an accommodation to Hurd.
In November 2010, Espinoza filed his books and records action against HP. Espinoza’s complaint quoted from the Allred Letter, and a copy of the Allred Letter was attached to the complaint. Hurd intervened in the action to maintain the confidentiality of the Allred Letter. The complaint and the Allred Letter were filed under seal, but Hurd was required to file a motion demonstrating good cause under Court of Chancery Rule 5(g) to maintain under seal any material Hurd believed was confidential. Hurd’s motion alleged that the Allred Letter should remain sealed under California law and under Court of Chancery Rule 5(g).
The Court of Chancery held that Hurd had failed to demonstrate good cause as to most of the Allred Letter and that a redacted version of the Allred Letter should be filed with the Register in Chancery. The Court of Chancery reasoned that Hurd had failed to establish his California law claims and further failed to establish good cause under Court of Chancery Rule 5(g).
The Delaware Supreme Court affirmed. Although the Court of Chancery had analyzed Hurd’s California law claims, the Delaware Supreme Court’s decision rested solely on Court of Chancery Rule 5(g). The Delaware Supreme Court explained that “good cause” to seal documents under that rule exists where the document would otherwise disclose trade secrets, nonpublic financial information, or third-party confidential material.
The Delaware Supreme Court held that the Court of Chancery did not abuse its discretion in holding that most of the Allred Letter should be unsealed. The Delaware Supreme Court reasoned that the Allred Letter did not contain nonpublic financial information, trade secrets, or other proprietary information. The Court further reasoned that the Allred Letter did not contain any third-party confidential information because (a) it was sent to Hurd in his capacity as CEO of HP, (b) the Allred Letter stated that Fisher’s claims were against Hurd and HP, (c) the substance of Fisher’s claims was widely reported in the media, and (d) the Allred Letter did not describe intimate conversations or conduct, even though it described Hurd’s behavior in “embarrassing detail.”
The full opinion is available here.