In re Oracle Corp. Derivative Litigation case brief
In re Oracle Corp. Derivative Litigation case brief summary
824 A.2d 917 (2003)
In plaintiff shareholders' derivative
action against putative defendant corporation and alleging defendant
directors engaged in insider trading while in possession of material,
non-public information, the special litigation committee (SLC) of the
corporation moved to dismiss the action.
CASE FACTS The corporation was successful,
publicly held, and in the computer software business. The directors
sold shares prior to publication of the quarterly corporation's
earnings. The earnings were lower than expected by analysts, impacted
by bugs in a newly released product, and affected by the stock
market's general decline. The sales were within the time limit
established for insider's sales. One director's sale was affected by
his option exercise deadline and to raise cash for income taxes. None
of the four directors had an especially urgent cash crunch.
Nevertheless, the chancery court's dispositive issue was whether or
not the two-member SLC was independent.
The SLC did not meet its
burden to prove it, or either of the members, was independent.
chancery court's independence test was whether the individual SLC
member was incapable of making a decision with only the best
interests of the corporation in mind, or, as a corollary, without
considering any way in which his decision would impact him.
that the SLC members and directors had to one university, as alumni,
tenured faculty professors, very major contributors, and speakers
were too vivid to be ignored.
CONCLUSION The chancery court denied the motion.
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