Opinion ID: 1890645
Heading Depth: 1
Heading Rank: 10

Heading: Word About the Oracle Case

Text: In his opinion, the Chancellor referred several times [39] to the Delaware Court of Chancery decision in In re Oracle Corp. Derivative Litigation. [40] Indeed, the plaintiff relies on the Oracle case in this appeal. Oracle involved the issue of the independence of the Special Litigation Committee (SLC) appointed by the Oracle board to determine whether or not the corporation should cause the dismissal of a corporate claim by stockholder-plaintiffs against directors. The Court of Chancery undertook a searching inquiry of the relationships between the members of the SLC and Stanford University in the context of the financial support of Stanford by the corporation and its management. The Vice Chancellor concluded, after considering the SLC Report and the discovery record, that those relationships were too close for purposes of the SLC analysis of independence. [41] An SLC is a unique creature that was introduced into Delaware law by Zapata v. Maldonado in 1981. [42] The SLC procedure is a method sometimes employed where presuit demand has already been excused and the SLC is vested with the full power of the board to conduct an extensive investigation into the merits of the corporate claim with a view toward determining whether  in the SLC's business judgment  the corporate claim should be pursued. Unlike the demand-excusal context, where the board is presumed to be independent, the SLC has the burden of establishing its own independence by a yardstick that must be like Caesar's wife  above reproach. [43] Moreover, unlike the presuit demand context, the SLC analysis contemplates not only a shift in the burden of persuasion but also the availability of discovery into various issues, including independence. We need not decide whether the substantive standard of independence in an SLC case differs from that in a presuit demand case. As a practical matter, the procedural distinction relating to the diametrically-opposed burdens and the availability of discovery into independence may be outcome-determinative on the issue of independence. [44] Moreover, because the members of an SLC are vested with enormous power to seek dismissal of a derivative suit brought against their director-colleagues in a setting where presuit demand is already excused, the Court of Chancery must exercise careful oversight of the bona fides of the SLC and its process. Aside from the procedural distinctions, the Stanford connections in Oracle are factually distinct from the relationships present here. [45]