Friday, May 2, 2008

Another Court Orders Discovery of Special Committee's Materials

In Young v. Klaassan (C.A. No. 2770-VCL, Memorandum Opinion and Order April 25, 2008) the Delaware Court of Chancery ordered the defendants to produce all documents prepared in support of the special committee’s alleged findings. In support of their motion to dismiss the defendants specifically argued that the special committee found no evidence of backdating or other intentional misconduct in connection with the award of grants that were examined, including all of the grants challenged by the plaintiffs. Thus, the defendants themselves put the materials of the special committee at issue, whereupon on plaintiffs’ motion to compel production the Court ordered that the materials of the special committee be produced, citing Fleischman v. Huang, 2007 WL 2410386 (Del. Ch. Aug. 22, 2007). The defendants then offered to strike the references to the special committee in their submissions; however, the Court determined otherwise, finding that the references warrant discovery. Interestingly, the Court suggests that it ordered the production of all materials of the special committee because the committee had not prepared a report. However, report or no report, every special committee should expect that all of its activities, materials and reports may become discoverable.

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