In re Oracle Corp. Derivative Litig., C.A. No. 2017-0337-SG
| Decision Date | 04 December 2019 |
| Docket Number | C.A. No. 2017-0337-SG |
| Parties | IN RE ORACLE CORPORATION DERIVATIVE LITIGATION |
| Court | Court of Chancery of Delaware |
Joel Friedlander, Jeffrey M. Gorris, and Christopher P. Quinn, of FRIEDLANDER & GORRIS, P.A., Wilmington, Delaware; OF COUNSEL: Randall J. Baron and David A. Knotts, of ROBBINS GELLER RUDMAN & DOWD LLP, San Diego, California; Christopher H. Lyons, of ROBBINS GELLER RUDMAN & DOWD LLP, Nashville, Tennessee; Brian J. Robbins, Stephen J. Oddo, and Gregory Del Gaizo, of ROBBINS LLP, San Diego, California, Attorneys for Lead Plaintiff Firemen's Retirement System of St. Louis.
Elena C. Norman, Richard J. Thomas, and Benjamin M. Potts, of YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; OF COUNSEL: Peter A. Wald, of LATHAM & WATKINS LLP, San Francisco, California; Blair Connelly and Rachel J. Rodriguez, of LATHAM & WATKINS LLP, New York, New York, Attorneys for Defendants Lawrence J. Ellison and Safra A. Catz.
Kenneth J. Nachbar, John P. DiTomo, Thomas P. Will, and Corinne R. Moini, of MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; OF COUNSEL: Sara B. Brody and Jaime A. Bartlett, of SIDLEY AUSTIN LLP, San Francisco, California; Matthew J. Dolan, of SIDLEY AUSTIN LLP, Palo Alto, California, Attorneys for Defendants Estate of Mark V. Hurd, Jeffrey O. Henley, George H. Conrades, Renee J. James, Leon E. Panetta, Michael J. Boskin, Jeffrey S. Berg, Hector Garcia-Molina, Naomi O. Seligman, Bruce R. Chizen, and H. Raymond Bingham.
A. Thompson Bayliss and E. Wade Houston, of ABRAMS & BAYLISS LLP, Wilmington, Delaware; OF COUNSEL: John W. Spiegel, George M. Garvey, and John M. Gildersleeve, of MUNGER, TOLLES & OLSON LLP, Los Angeles, California, Attorneys for Defendant Evan Goldberg.
Andrew S. Dupre, of MCCARTER & ENGLISH, LLP, Wilmington, Delaware; OF COUNSEL: Robert P. Feldman, of QUINN EMANUEL URQUHART & SULLIVAN, LLP, Redwood Shores, California; Christopher D. Kercher, of QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York, Attorneys for Defendant Zachary Nelson.
Thomas A. Beck, Blake Rohrbacher, Susan M. Hannigan, Matthew D. Perri, and Daniel E. Kaprow, of RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware, Attorneys for Nominal Defendant Oracle Corporation.
In the cryptozoological division of equity's menagerie are a number of rarae aves and chimeras—some, perhaps, not so chimerical as once thought.1 One unusual denizen2 is on display here. A stockholder brought a purported derivative action, alleging that insiders had structured an acquisition unfair to the corporation. The action withstood a motion to dismiss, and the corporation formed a special litigation committee of the board to evaluate the claim. I then stayed the matter for several months, to allow the special litigation committee, assisted by its own counsel, to consider the cause of action. Ultimately, the special litigation committee found that it was in the corporate interest that the cause of action be pursued, and determined that that asset would best be monetized on behalf of the corporation by allowing the original plaintiff to proceed, derivatively.
The corporate asset, the cause of action, was thus returned to the Plaintiff on the corporate behalf. These unusual circumstances present, for consideration here, unusual questions: does the litigation asset transferred by the special litigation committee to the Plaintiff include the documents made available to or relied on by the special litigation committee? If so, to what extent, and subject to what (and whose) privileges?3 I find that the litigation asset was enhanced by the review of the special litigation committee, and that documents relied on by that committee pertainto the asset and must be available to the derivative Plaintiff as fiduciary for the corporation designated by the special litigation committee, subject to the privileges and immunities that may be raised by the individual Defendants and the special litigation committee in its business judgement. My rationale, in the context of cross discovery Motions, is below.
Nominal Defendant Oracle Corporation ("Oracle") is a Delaware corporation headquartered in Redwood City, California.5 Oracle is a technology company whose offerings include "an integrated array of applications, servers, storage, and cloud technologies."6 Oracle employs over 135,000 people and its market capitalization exceeds $200 billion.7
Defendant Lawrence J. Ellison founded Oracle in 1977, and was Chief Executive Officer until he became Chairman of Oracle's Board of Directors (the "Board") and Chief Technology Officer in September 2014.8 Ellison also co-founded NetSuite Inc. ("NetSuite").9 Prior to its acquisition by Oracle, NetSuite "provided cloud-based financial management and ERP software suites for medium sized businesses."10 According to the Lead Plaintiff's Verified Second Amended Derivative Compliant (the "Second Amended Complaint"), Ellison owns 35.4% of Oracle's outstanding stock.11 Ellison, through his ownership of NetSuite Restricted Holdings LLC, held 39.2% of NetSuite's common stock as of September 30, 2016, when NetSuite was purchased by Oracle.12 Ellison received $41,518,534 in total compensation from Oracle in 2016.13
Defendant Safra A. Catz is Oracle's Chief Executive Officer.14 Catz assumed this role in September 2014 after holding various positions at Oracle since 1999.15 Catz was a member of the Board at the time of the filing of the original complaint in this Action.16 Catz received $40,943,812 in total compensation from Oracle in 2016.17
Defendant Estate of Mark V. Hurd is the legal successor to Mark V. Hurd, who was Oracle's Chief Executive Officer until his death in October 2019.18 Hurd assumed this role in September 2014 and was previously Oracle's President from September 2010 to September 2014.19 Hurd was a member of the Board at the time of the filing of the original complaint in this Action.20 Hurd received $41,121,896 in total compensation from Oracle in 2016.21
Defendant Jeffrey O. Henley is Oracle's Executive Vice Chairman of the Board.22 Henley assumed this role in September 2014 and was previously Oracle's Chairman of the Board from January 2004 to September 2014, and Oracle's Executive Vice President and CFO from March 1991 to July 2004.23 Henley received $3,794,766 in total compensation from Oracle in 2016.24
Defendant George H. Conrades is a director of Oracle.25 Conrades assumed this role in January 2008.26 Conrades was a member of the special committee created in connection with Oracle's acquisition of NetSuite (the "Special TransactionCommittee").27 Conrades received $468,645 in total compensation from Oracle in 2016.28
Defendant Renée J. James is a director of Oracle.29 James assumed this role in December 2015.30 James was chairman of the Special Transaction Committee.31 James received $548,005 in total compensation from Oracle in 2016.32
Defendant Leon E. Panetta is a director of Oracle.33 Panetta assumed this role in January 2015.34 Panetta was a member of the Special Transaction Committee.35 Panetta was also a member of the special litigation committee convened to "investigate, analyze and evaluate all matters related to this lawsuit and claims made in [this] action."36 Panetta received $424,681 in total compensation from Oracle in 2016.37
Defendant Michael J. Boskin is a director of Oracle.38 Boskin assumed this position in April 1994.39 Boskin received $724,092 in total compensation from Oracle in 2016.40
Defendant Jeffrey S. Berg is a director of Oracle.41 Berg assumed this position in February 1997.42 Berg received $512,398 in total compensation from Oracle in 2016.43
Defendant Hector Garcia-Molina is a director of Oracle.44 Garcia-Molina assumed this position in October 2001.45 Garcia-Molina received $425,645 in total compensation from Oracle in 2016.46
Defendant Naomi O. Seligman is a director of Oracle.47 Seligman assumed this position in November 2005.48 Seligman received $440,645 in total compensation from Oracle in 2016.49
Defendant Bruce R. Chizen is a director of Oracle.50 Chizen assumed this position in July 2008.51 Chizen was Oracle's Lead Independent Director until at least September 2016.52 Chizen received $716,061 in total compensation from Oracle in 2016.53
Defendant H. Raymond Bingham was a director of Oracle from November 2002 until March 2017.54 Bingham received $890,902 in total compensation from Oracle in 2016.55
Defendant Evan Goldberg co-founded NetSuite with Ellison and was NetSuite's Chief Technology Officer and Chairman of its board of directors.56 Before co-founding NetSuite, Goldberg worked for eight years as Ellison's "close engineering lieutenant at Oracle."57 Goldberg owned over $217 million of equity in NetSuite upon NetSuite's acquisition by Oracle.58 Subsequent to the acquisition, Goldberg was named Executive Vice President, Oracle NetSuite Global Business Unit.59
Defendant Zachary Nelson was NetSuite's Chief Executive Officer.60 Prior to holding that position, Nelson was Vice President of Marketing at Oracle.61 Nelson owned over $88 million of equity in NetSuite as of NetSuite's acquisition by Oracle.62
Lead Plaintiff Firemen's Retirement System of St. Louis was a stockholder of Oracle at the time of the conduct described in the Second Amended Complaint and has continuously held Oracle stock since then.63
Oracle was co-founded by Ellison, Bob Miner, and Ed Oates in 1977.64 The Second Amended Complaint alleges that Ellison has a "cult leader status and control over Oracle," which has persisted even though Ellison passed his CEO title to Catz and Hurd in 2014.65
NetSuite was co-founded by Ellison and Goldberg in 1998.66 Ellison and Goldberg intended NetSuite to "provide companies with business management software over the internet," and Ellison, through an affiliated entity, provided...
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