The Non-Inspection Inspection Rights in Delaware: Espinoza v. Hewlett-Packard (Part 2)

By now, the difficulties of Mark Hurd, the former CEO of HP, are well known.  He received a letter from a former HP contractor, Jodie Fisher ("Letter"), apparently making claims of misconduct.   He revealed the letter to officials at HP and eventually resigned as CEO. 

Plaintiffs sought to inspect documents related to Hurd's departure from HP.  In response, HP provided a copy of the Letter subject to confidentiality restrictions.  Unable to resolve the confidentiality issues (HP did not view the letter as confidential but Hurd did), Plaintiff filed suit under Section 220 and attached a copy of the Letter to the complaint.  See Espinoza v. Hewlett-Packard Co.  The letter was, however, placed under seal.  The Chancery Court eventually addressed whether the letter should remain under seal and, after analyzing the privacy rights of Hurd, concluded that it should not.  The case is now on appeal (and the letter remains under seal).

It took 70 pages for the court to decide that the Plaintiff could make public a letter that it already had (or, more accurately, make public a letter it already had).  Even with the decision, the court was willing to stay disclosure.  This did not bode well for Plaintiff's efforts to obtain information not already in his possession.  And, in fact, the court orally denied Plaintiff the access to other documents sought in the inspection rights request.

Much of the request related to an investigation conducted into the matter.  Following receipt of the Letter, according to the court, the board hired Covington & Burling to conduct an investigation.  The law firm produced an interim report.  The Report played a role in the Board's deliberations with respect to Hurd.  Id.  (noting that the board "received the report and discuss[ed] the situation at several meetings of an executive session of the nonemployee members of the board of directors"). 

Despite the apparent importance of the Report, the court did not allow the shareholder to have it pursuant to an inspections right request under Section 220.  We will look at the reasoning in the next post. 

Primary materials can be found at the DU Corporate Governance web site.