S in corporate cases in the Delaware Court of Cancry and also in securities fraud class actions in federal court around the country and also internationally, plays a significant roles in a number of important cases, as I said, both here and abroad. In 2022, the scheme was named to the list of elite women in Plaintiff's bar by the National law journal, quite. And as I said, we're really delighted to have her as a member of our Weinberg Advisory Board. We see I turn and we ask you to introduce your fellow man. Thank you so much, Jef Son again. I'd like to welcome everyone to this Weinberg Center program titled Spa and Special Mtigation Committee, what's working, what's not, and how we can improve the process. I'm joined by a very impressive panel here today. To my immediate left as a man who needs no introduction, but I'll introduce them anyway. This is Vice Chancellor Joe Slightz. He has had a distinguished career on both the bench and the bar. Having served on both the Delaware Superior Court and the Delaware Court of Chancery, a former partner of Morris James, Vice Cf slights is now a partner with Wilson Suzani here in town. And he frequently counsels corporations and boards of directors on a host of complex corporate law issues, and he's represented a number of special litigation committees. To offer the plaintiff's perspective on these topics, I'm joined by two of the plaintiff's bars absolute top litigators and personal friends of mine, Mark Richardson and Dave Cechll. Mark is a partner with baton Keller Suero, and he has litigated some of the most high profile cases in Delaware, including securing a historic $1 billion settlement in the Dell Class V stockholder litigation. And he has a wealth of experience representing plaintiffs in cases in which special litigation performed, including both the Carvana and mersurce virgin matters that I've worked on. With him. And I have you guys in the row older because of where you were sitting. Dave Tech is one of the founding partners of Friedman Ouster Tech and frequently appears before the Delaware Court of Chancery in high States litigation. Dave was a member of the trial team in the Torto versus Musk case in which he secured a truly epic ruling invalidating Elon Musk's $59,000,000,000 compensation package. Dave is deeply experienced in cases involving SLCs including the recent Baker Hughes matter that our firms work on together. And finally, to present the defendants for the company's perspective, we're joined by Elana Norman. Elena is a partner at Young Conaway and a member of the firm's management committee. Elena has defended corporate clients in some of the most high profile cases in the Court of Canes including the DL Class B stocker litigation, the CBS Corporation derivative litigation, the Oracle Corporation derivative litigation and the Dole stockholder litigation. Miss Norman frequently counsels board of directors and special litigation committees on a wide variety of Delaware corporate law issues, and it's one of the top corporate litigators in the country. So I'm truly honored to be joined by this panel here today. I've got a good job getting plaintiffs on the panel and plaintiffs in the room. I feel very intimated one number, you know, I understand that what I've been hearing it's very rare to have a cattle, that's more plaintiff heavy than defense heavy. And I guess since I organize this by personal contact is more plaintiffs heavy, but I promise Leo you were not here to be a punching bag. And we are very, very. I'm here. Here very excited to your ever per I'm excited to be here, and I'm happy to that the discussion? No. 100% not. And I'm going to kick this over to C slights. Now, Spana decision at most people the ur. It's been around almost as long as I've been alive. It was issued in 1981. And it's evolved significantly over that 40 some year period. I was wondering Vice share some perspective on Sa it's holding evolved over the Sure. Sure. Good to be with you all. Can you hear me okay? Yeah. So I'm now realizing that my contact lenses serve their useful life you are all just sort of hazy shadow in the crowd, so you can make whatever hand gesture you count towards me, and I'll just think you're waving. But a little disturbing. Do not be on the roads, probably in about an hour. Home, but it's a little unsettling. With that said. So when I joined the superior court in 2000, I took the seat of then Judge Quillin, who was on his second term with the superior court. Okay. And before that, we had been friendly but but not really close friends. He he at that point, sort of took me under his wing and became a good friend and a mentor to me. And I had occasion just because there was a lll and conversation at lunch one day to ask him what he felt was the most consequential decision he had ever rendered. And he said that depends and, you know, went in a couple of different directions, but he said certainly with respect to the corporate law, the Zapata decision by far he felt was the most consequential and perhaps one of the most difficult decisions that he had to render. At that point, he was a justice on the Supreme Court. As most folks know here, Judge Quillin, Justice Quillin, Chancellor Quillin, served on all three of the constitutional courts that deal with business law matters. And what he said is, I really felt like our system of corporate governance in Delaware was front and center and at the heart of what we had to decide. To what extent are we going to actually honor the statutory grant of authority to the board of directors who manage the affairs of the corporations? And included in that as a subset is the recognition in Section 1401 that boards can delegate that authority to committees. There are certain restrictions laid out in the statute 1401 C. But beyond those restrictions, there is no statement in the statute that talks about the timing of creating a committee of the board to address the affairs of the corporation, the circumstances under which that committee will be created. And clearly, up to that point and certainly after Spata, the recognition was that the committee was by statute an extension of the board. And so at the Court of Chancery level, the vice chancellor and Zapata determined that it was beyond the board's business judgment to determine that a properly brought derivative action could be and should be dismissed. The business judgment of the board does not encompass that decision. And what Justice Quillen and his colleagues on the Court, I believe it was Justice Duffy and Justice Horsi decided is that's the wrong paradigm. This is fundamentally a question of statutory authority. Does the Board have the authority to create a committee to manage the litigation asset? Even in a circumstance where a majority of the board may be compromised by virtue of a lack of independence or interest in the underlying transaction or the claims that arose from that transaction. And so in some jurisdictions, Justice Quillin, I remember saying to me, if we were in New York, we'd say, absolutely. And we don't question it. There is total deference given to that decision to decide to terminate litigation, so long as the committee members are independent. He felt that that was too much given the human dynamics at work. You're asking board members to typically, almost always pass on the question of whether claims against fellow board member should proceed or be terminated. And that dynamic, even in the best with the best of intentions, creates a level of concern. And so where Justice Quillen and his colleagues came down is, let's strike a balance. Let's hit a middle ground. Recognizing that statutory authority and giving credit to that. But on the other hand, recognizing that there is a human aspect to this that has to be managed a bit by the court. So this is not a situation where there will be no second guessing by the judge who's asked to decide if the committee's work was properly performed in their recommendation with Mart. And so the two part pata test was born. Literally, out of The minds of three justices. Really no precedent for it before. There's no test like it in our law. It was three judges trying to do their best to strike a about. And I have to say I have tremendous respect obviously for the judge who wrote the decision, but for the decision itself. It does, I think, create a balanced approach to this issue. The claim is the corporations. It's not the stockholders. Fundamentally, you have to start with that premise. The stockholders bring the claim because the board has for whatever reason, not 23.1 gives stockholders that right. The reason this special litigation committee exists is because a majority of the board is somehow compromised. If that weren't the case, the board would manage the litigation asset as it does, any other. So the committee exists for that reason? The committee then is an extension of the board. The committee members have fiduciary duties. When independent directors are exercising fiduciary duties, our law bestows upon them a level of trust that they will do it and do it with the corporation's best interests at heart. Okay. When the special litigation committee hires counsel, the presumption, I think that flows from Zapata and its progeny is that that counsel is doing its best to advise the committee to fulfill its fiduciary obligations through the corporation to manage the litigation asset properly. I trust that process. I do. I have trust in it. I know that it's hard if you're the plaintiff who brought that case to share that trust because of the circumstances under which the committee is formed. But I have that trust. So I don't need to interrupt you, but I want to ask a question because you mention Zapata and the notion of balance. And Zapata speaks about the need for a corporation to. You're talking fast. Could you? Sure. So Zapata speaks about the need for the corporation to have the ability to rid itself of detrimental litigation. And I understand that by necessity, a Rule 23.1 motion would have to proceed the formation of an SL state. How does the practice that has evolved over the years of permitting the company to move under both 23.1 12 b six. How does that fit in? Before it committee is formed? How does that fit in with the notion of balancing and the company ridding itself of detrimental litigation? Because sort of by that point, an independent judge has determined that the suit has merit. So it's not a strike suit and it's not wholy meritless. And one reading of Zapata could have been that the SLC formation would have to precede a 12 b six motion. And that hasn't been how Spata has played out. And I was wondering if if you have any thoughts on that by Cancer or particularly Mark and David as plaintiff's lawyers? I think that's sort of an interesting tension. Yeah. So I'll start with at least the perception, I think of counsel to SLC. The inquiry that you're undertaking is not is this a strike suit? Is the litigation meritless? That is not the ultimate question you're being asked. Answer. The question you're being asked to answer is, is it in the best interests of the corporation to pursue these claims to judgment? Part of that analysis, for sure. Involves an assessment of the merits of the action. But there are other considerations at work as well that SLC has to undertake. So yes, a claim could survive a motion to dismiss on the pleadings. But nevertheless, ultimately be deemed by the SLC, not to be in the best interests of the corporation to pursue. Those two conclusions in my mind, are not inconsistent. And I think Zapata actually refers to merits harmful litigation and strike suits as litigation that corporations can review and determine whether to rims it isn't just strike suits or meritless litigation, but it has the word harmful. And so that's essentially what LC is. The notion of harmful all litigation could be deemed harmful. Phones are above your head That's why we're having some of us having trouble here and I'm really sorry. No one has ever had a distant corner of my office, I grannize could be considered harmful in some way. It involves resources, reputational costs, et cetera. So how are we to think about the proper meaning of harmful within the balancing act that apa was seeking to strike? So yeah, I'm happy to speak to this. I think in my mind, that's one of the core questions right now about the SLC process, the present day SLC procedure. Have we lost this delicate balance, I think the vice chancellor very eloquently said it was three judges doing their best, trying to strike a balance, and I think they struck the appropriate one. Okay. And they explained it in Zapata itself, if it's okay? I'll advance a slide exclude here. Please. All right. So it seems to me based on my reading of Zapata, that the purpose of that decision was to provide boards with an efficient mechanism to as Elana said, allow a corporation to rid itself of harmful litigation. And Zapata itself underscores the importance of achieving that balancing point where bona fide stockholder power to bring corporate causes of action cannot be unfairly trampled on by the Board of Directors, the corporation can rid itself of detrimental litigation. And I think in my opinion, at least, maintaining that balance is critically important. Zapata and the SLC process, I believe, are intended to preserve the litigation we, these bona fide derivative claims, and then to efficiently eliminate the litigation chat, which is this meritless or harmful or strike suit litigation. And Zapata also explains why this balance is so important. It says, I corporations can consistently rest bona fide derivative actions away from well meaning derivative plaintiffs. I have it here, Don't worry. Through the use of the committee mechanism, the derivative suit will lose much, if not all of its generally recognized effectiveness as an intercorporate means of policing boards of directors. So as I read that, that means that under Zapata, bona fide derivative claims must survive because if they do not, then the derivative suit will essentially lose its teeth. On the other hand, and this is where the balance comes in, I corporations are unable to rid themselves of meritless or harmful litigation and strike suits, the derivative action created to benefit the corporation will produce the opposite unintended result. And by the way, all these quotes are from Zapata itself. This is the origin story that we're talking about. And as I interpret those words, it means that corporations need a surgical instruments with which to cleanly, and efficiently excise truly harmful litigation. So the question in my mind is whether in looking at present day SLC practice and procedure, Are SLC still that surgical scalpel used to cleanly and efficiently excise harmful litigation, or have they somehow mutated into something more akin to, like, a guillotine, which is eliminating a much broader range of claims, including claims to Christine's point that have survived scrutiny under Rule 23.1 and 12 b six. One of the other things I find interesting, if you look at the original pota decision, it was sort of your garden variety breach of fiduciary duty lawsuit? And in the 40 years that have elapsed since Zapata, it's expanded beyond that. And SLCs are now available in cases that are governed by the entire fairness standard of review, cases involving controlling stockholders, Brophy claims involving insiders, using misusing corporate assets to profit themselves. Is this what Zapata was intended for? Yeah. I'll jump in there. You don't mind going to slide 15 for me. You know, I agree with what everyone had said so far. And I think what I personally struggle with when I review the pata decision, but also its progeny is there isn't a whole lot out there on Prong two. Okay. To me, Prong two is really about context. And I think you know, from the plaintiff's perspective, context matters, it really should matter? And I think a series of questions need to be asked. Is this the type of case where an SLC is really appropriate? Is it, for example, a compensation case where the board is naturally all conflicted and there's no chance of getting it dismissed? Or is it a Controller entire fairness case, that's overcome the Rule 23.1 motion. And you know, those are the types of cases in my mind, the controller entire fairness case, or has said pretty clearly. These are the circumstances which require most scrutiny that require court to trick well. And is the SLC process avoiding that? I don't think that it should. As another example. We've seen lots of SLC you know, we've seen lots of SLC performed in oversight. Is the case one where there's a corporate trauma that's theoretically possible sometime in the future, or is it one where there's been a severe corporate trauma on the back of a DOJ investigation where real wrongdoing was identified. I think that's another question that's relevant. The other thing is, I think if you ask any plaintiff's lawyer about settlements that the Court of Chancery rightly so has taken a really close look at settlements? They're looking really hard at scope of the release. That's been provided in settlements? And I just offer this thought is, you know, the second prong of Zapata could really be analogized to the give GT analysis in a settlement. And when an SLC is moving to dismiss in the context of a controller entire fairness case or an oversight case that's puts by a DOJ investigation, and the SLC is coming into the court and saying, dismiss this case for nothing. Why is the same analysis not being done in that context? That's a very interesting question, especially in light of the fact that the second prong is considered wholly discretionary. And it's, you know, frequently, we'll see opinions where the second prong isn't addressed at all, or it's addressed in a paragraph sort of generically saying, Well, we can look at this, we don't have to, but in an abundance of caution, we looked at it, and there's nothing to see here. Is the second prong to has it become toothless? It really ought not to be. And if you read Papa itself says that the second prong is the key to striking the balance. So I think the Court should be taking a harder look at front two and how to actually apply Pro and asking questions about what type of case is this? It's just a case that deserves judicial review. And of course, you didn't get to front talk more about that. But I think Pro two as the Zepata Court said is the essential key. I think I'll put my Judge's hat on for just a moment. I think in the modern pata jurisprudence, it is the rare bird for the court not to move to P two. The reason there might be some sense that it's being given short shrift is because often, what the court says is, I've already basically done Prong two in my analysis of prong one. Prong one analysis. The attacks on the independence of the committee and the committees process have been mounted as part of prong one. I think strategically and wisely because the plaintiffs aren't sure that folks going to get to P two. So there's a full blown challenge with regard to the Pn one features. But by the time the court's done now analyzing that, it's often the case for the reasons I've said above, I'm comfortable in my independent of business judgment that the outcome is. And when you read the plata I don't read it sort of lending itself for P two to be a bright line kind of balance like give G weighing that particular question. It seems like it's more about the spirit. I think it even uses the word like the judge is basically doing a gut check to see if it all makes sense. And I think even if there were a give get analysis, I think it's I strongly disagree with that first ball where it says, when an SLC moves to terminate, it is obtaining nothing for the company in exchange for releasing the claim. Because as we've talked about the FLC is considering interests of the company that go beyond just the value of the claim, maybe maybe the SLC is looking at other things, the costs, publicity, the distraction, the need to move on. What impact is continuing the litigation going to have on parallel litigation that has, will it impact defenses that the company has in other litigation. Could it could bring suit constitute a harmful admission and other pending litigation. So there's just a host of factors that the SLC may be considering that deciding not to prosecute the litigation is getting something for the company. So I don't think it's fair to say obtaining nothing as a matter of course. Well, in fairness, if I see an SLC report that mentions, you know, you know, this litigation would be harmful because of the things that might how it might impact other litigations, that would be I don't think I've seen that. It seems to me that when an SLC is formed, there's a generalized understanding at least on our side of the that the settlement value of the case is drastically reduced. And that's because of the threat of dismissal, but also because as you know, SLC has can settle cases. And I think, generally speaking, in the context of sort of what I view as a non adversarial Well, non adversarial type of posture that the settlement value is. So maybe maybe from the company's perspective, maybe that's a good thing. I mean, maybe from the far perspective, that's not a good thing, but maybe from the company's perspective, taking all things into consideration, reducing the settlement values is in the best. And the child is working. And I think there's also a misconception sometimes that FLC is kind of defendant biased and is going to probably end up either recommending settlement on terms that are very beneficial for the defendants or going to dismiss the litigation. And as I talked about a little bit, I think on our pcall you know, that's certainly not always the case having litigated the Oracle NetSuite case where the SLC recommended gave the case back to the plaintiffs, you know, that's a situation where you know, clearly they weren't just doing whatever the defendants wanted. I think there have been developments in the Bluebell litigation recently, similar to that. So I think the idea that once there's an SLC game over for the litigation is maybe something that is more of a myth in reality. So I agree with Elena that Red face a pot in its progeny allows and probably so the Board and the SLC to look at the sort of other factors rather than just the the standalone value of the claims, but I do think sort of the more of these kind of like exogenous ogenic factors that you introduce some risk is introduced, because now it's getting increasingly subjective. And I've definitely seen briefs in support of termination that mention these issues, but I don't think I've ever seen is any sort of quantification of them. And I think if you go back to, I think supplied itself and it certainly resuscitated in Dieppe trimern a litigation as a derivative claim as a litigation asset. It's like a fleet of trucks. And it needs to be thought of in that sense, and that's an economic question, I think. And so I certainly think if an SLC wants to go down these sort of alternative paths, well, you got to think about publicity and this factor and that factor, it seems like there should be some quantification of that. And just in my cases in the cases I've read, I've never seen That's a really interesting point because when you look at a case like America urges, for example, at $800 million fine paid. From an outsider perspective, it seems like that to be a brainer. Like, of course, you're going to pursue the litigation to try to bring some of that money back into the company. And when you start comparing the $800 million fine with these unquantified sort of fuzzy reputational arm things, it seems like there's not a balance there. And I'm wondering how you think about that when advising SLCs Okay. Well, ultimately, the SLT is making a determination of what's in the best interest of the company and looking at lots of factors. And one of the factors and probably the primary factor is the strength of the claims. And what you know, the strength of the claims. And yeah, what kind of recovery is possible and how much it would cost to recover Okay. But but I think it's just it's very case specific and very holistic and a lot of balancing of factors. And yeah, some of them are not easily quantifiable. But I think that's that's fine under the way I read Zapata, at least. But I think I think there's also mindfulness of the claim. I don't I don't think there's a loss of focus on the actual claims. And I think that's usually I don't know if by Chancellor Slight agreed, but I think, you know, the a lot of the time and they do or focus on the kind of like a sliding scale, the stronger the claim is and the more recovery that possible, the less the committee, they're probably going to weigh these other factors. That's right. I mean, at the end of the day. Okay. You're representing members of the board who control an asset and want to exploit it to the fullest extent that they can with the best interests of the corporation in mind. I'll return to where I started, which is, I think Justice Quillin and the Supreme Court had faith in committees being able to do that, set out a test that would allow the plaintiff's bringing derivative or actins to inquire and to challenge that in the right circumstance. But the presumption is that folks are going to fulfill their fiduciary duties, it is not a for conclusion. That the investigation will be robust, handled the way the committee thinks is most prudent to handle, and that they will do their best, the best they can to reach the right result here. I appreciate that folks on the plaintiff's side of the don't share that view. At least not always. And I understand you as somebody who mediates a good bit. I try to understand what's motivating humans to feel the way they do. You brought claims. The company didn't bring them. Board didn't choose to bring them. Then they choose to challenge your bringing of those claims, they lose. And now an SLC committee is formed. That's not a great dynamic to instill a whole lot of trust on the plaintiff's side of the V. On the other hand, you have folks on the defense side of the V who are questioning the motives of the plaintiffs who brought that case in the first place. And what their incentives are. So there's distrust there as well. I think that's a lot of the defendant, you're not always so happy when there's an because Sometimes it feels like a black box for us as well, right? And so I'd love to be able to tell the SLC. Hey, this is really what you got to do and I, you know, there's not an open door policy with defense lawyers. In an LC process. For good reason. But it's nerve racking for defense counsel as well when there's an SLC which is something that I think. I have no question about that. Just want to get this last thought. Which is you've got mistrust on both sides. And I really do view as I think Justice Quin did, the SLC is rising above that and actually trying to be an objective voice in the room with incentives that are geared to the best interests of the corporation. If that doesn't play out, Spata gives you a means to challenge that But in the absence of a successful challenge under Zapata, I don't I'm still struggling with the idea of why it is that an SLCs determination properly supported by independent members of the board who are statutorily charged with the authority and right to manage that asset ought to be question in terms of the outcome. Once Zapata has run its course. So this is a question I have about that because in theory, at the end of the process, the termination decision is reviewed under something that's akin to a summary judgment standard. In that backgrounds truck, we the system hole that there's going to be some sort of full throated presentation of evidence and an independent judge is going to determine if there is a genuine dispute of material fact. How do we square that with the fact that unlike in a traditional summary judgment motion, there hasn't been full discovery. The SLC will have conducted an investigation, and sometimes they'll share more details with the plaintiff, sometimes not SLC issues a report and certain pieces of evidence are relied on and they're in that report. And then the plaintiffs in presenting their summary judgment challenge are sort of looking through this key hole. And that's the lens through which the 56.1, you know, the Rule 56 analysis is applied. So is that sort of consistent with the notion that, you know, restoring trust and what can we do to maybe improve to remove some of the mistrust. Well, I'll start and just say this. I think in the early 1980s Chancellor Brown had occasion to really think about and consider Spata. I think what he recognized as a theme in his decisions is Spa contemplates a certain efficiency on a certain focus in terms of what the SLC is going to do. And to the extent that we permit full blown discovery as if the SLCs more narrow approach never happened, then it does raise the question as Chancellor Brown raised. What's the point of the SLC in the first place? So I agree, you've got to strike that balance, which is your word, I guess we're going to use a lot, which is giving the plaintiffs what they need to mount a nafide challenge to the extent they disagree with this special committee litigation committee's conclusion, but at the same time, not just completely eviscerate the efficiencies and purpose of the committee process first. So I guess in response to that, I would say, I see a material difference between full bow discovery and transparency. Right. I do agree with that. I also agree with what you said, Spa is an awkward situation. You have hurt feelings potentially on both sides. And at the same time, when a plaintiff challenges and MLCs A motion to terminate and questions the investigative techniques that they took. There's a lot of pushback. How are you question you're questioning my integrity, you know, you're saying that I didn't do my job. There are hurt feelings on all sides. So I think you know, hopefully, what comes out of this candel are some real clear ideas about how we can make this process better for everybody. And I think transparency is really the way to do that. I mean, so just to sort of cover the basics. Obviously Spata presents a summary judgment standard to an SLCs motion to terminate the plaintiff. If the plaintiff is able to show that there is a disputed issue of material fact or I guess, rather, the SLC has the burden of showing that none exists? You know, the Court cannot grant motion to terminate. And I think, you know, good next One of the contextual things from the plaintiff's perspective that I think You know, we love is what we get versus what the SLC gets. And I'm not saying that we should get full crack at the facts and the witnesses, same way that the SLC gets. I think that's the difference of course between full bone discovery and transparency. Look at what the SLC gets. They get full document discovery, they get to get whatever they want. They have full authority to access the board or you know, the corporation's documents. They can have so of course served subpoenas. I'm not sure I've ever seen seen an SLC service subpoena. But they get a report limit. We the facts and three or 400 pages. They get a 14,000 word opening brief and an 8,000 word reply. They get to speak first and last and they can introduce live testimony to Patris, whatever issue they want, whether it's independence of diligence, et cetera. Plaintiff gets an answer in brief and a responsive argument does not get the same documents that the SOC gets, does not get to pose any fact witnesses. And we're on a summary judgment standard. So we view this as a pretty big disparity. And the question, I guess, you know, the issue for us is this disparity is fine. I Rule 56 plot. And I think there's another layer of disparity as well, because V Chancellor Slides correctly raised the idea of efficient. It's important for this mechanism to happen efficiently. That makes perfect sense. And yet you have, I think, increasingly extensive and costly and burdensome investigations. But none of that information or not a lot of that information is being shared with the plaintiffs. And so why is that only cutting one way? Well, it's okay to deviate from the efficiency when it comes to the SLC doing its job. But the plaintiffs don't get any of that stuff would cut that because it would be too inefficient to let the plaintiffs investigate that. Well, here's a question just to show that I'm not completely biased. Are the plaintiffs to blame for some of that inefficiency? In other words, because the FLC knows that at the end of this, they're going to have to defend their investigation? And are they maybe being forced to go down avenues that are inefficient and wasteful just to sort of spend off challenges from us down the road? Perhaps. I think perhaps, but I think the answers for that is to provide transparency and to work together in a way that's more productive. P you have some ideas for that. When you say transparent like what do you mean by transparency but not full blow like discovery. I have trouble out. It does cost does not cost the company anything. Provide the same documents the SLC has to the plaintiff seeing actually because there's You've got a privilege understanding. The SLC shares the company's privilege. There's no privilege review undertaken. And that says, you know, pretty mad. Right. But every SLC that there's five ten. Well, if there's a law and it's short. But the stuff that's being relied upon, at least my understanding and I haven't done that is there's a willingness to go down that road because the privilege extends to the SLC, the company's privilege. It's it's probably they're going to be a little less inclined to get to do that if they're sharing that with Plaintiff's counsel. Why that is. Why is the company from greater transparency into the investigation for greater transparency into the underlying evidentiary record for the transaction. Why is that not beneficial to the company? And who does it harm to shine light into those black boxes? Light is getting shine. That's the whole point of the SLC process is to shine a light. But to allow plaintiffs to see the illuminated inside of the black box. Okay. I hear the point of privilege, but it certainly goes beyond that, right. So so maybe privilege has to be thought through a bit more, but fft is a very useful tool. And the concept of I didn't have to give me what I'm citing and relying upon, and I'm not going to give you the rest. Hamstring is our ability to actually investigate the investigation, which is the point of. And, you know, so you know, really, when we're talking about efficiency. The idea of, you know, sort of informal witness interviews, Where there's an extensive summary memo, you know, drafted by an associate or a partner for $1,000 an hour. You can just transcribe that thing. It's like 200 bucks for a court reporter and then give it to us. And we can look at it. You know, I don't so that to me is another suggestion for how to make this a more clear process. T of the benefits of transcribing SLC witness interviews. Not only is the light fully shown on what that interview is like. To make sure that it's not just a cow. You didn't know anything about that, did you? No, of course not. Okay. Make sure that that's not happening. I assume that it's not happening. But it would be nice to certain today. I don't know what to say today because that is not happening. At least not in the ones I'm doing. But it Sree flow discussion. Well, a court report would literally quit. I can't imagine a court reporter trying it's not a question to answer interrogation because I think there is some sense that you can actually be more in their pocket. That's a fundamental question. Why should the plaintiff even be privy to any of that. It's the directors who are charged with managing the computed assets. The litigation is an asset in the comp the plaintiffs had gotten by motions to dismiss so they have a claim. But why did that get them in the board room or, you know, the committee room top the committee's process of evaluating what it's going to do with the medicine. Well, I mean, so first of all, I mean, my understanding is as a technical matter, when you get over a Rule 23.1 motion, you have standing. So now by taking the case away, you're impacting the stockholder, right, which implicates sin process that I can understood to be a form of enhanced scrutiny. So I do think just in terms of, you know, Spot talks about more of the cases that have come since Spot talk about instilling confidence in the process for the corporation, but also for the court, for the litigants, for the stockholders. I just don't see any downside to producing some record other than a lawyer drafted memo about how the interviews are being conducted, which are critical what documents are being shown to the witnesses, how they're responding, how they're following up. And the disinfectant that that would provide is now think about, you know, yourself conducting an SLC investigation. The question is going to behave differently. How is that not a good thing? How is it not good to actually engage in an? Not necessarily adversarial, but in a way where everyone knows the court's going to see what I'm doing here. How can that possibly be a bad how can that not be adversarial? And I mean, isn't there an argument that it would chill the witnesses ability to speak freely and openly and to really as Chancellor Sights have kind of a pawing and performing discussion about things. I completely changes the whole dynamic in a way that might not be as. But if the concern is that if it's isn't the answer to making sure that you're still getting the proper information from a witness to just swear them in, have them testify under oath? No. No. No. That's not that's not how the dynamic works. In my experience with that look, I think it's start the premise that the SLC is going through the motions and that the engagement with the witness is not going to be meaningful and everyone you saying, I think make sense. But what I will tell you is I think most SLCs at least the ones I've been involved in. When they interview a witness, they have the goals just like you do in a deposition. They have information that questions that they ask that they want answers to. They have documents that they confront the witnesses with. It's just not done in the same way as a deposition because among other reasons, that then engages the defense lawyers in raising objections and, you know, it My goal is for the defense lawyers to fade away. What I want to talk to you about it, right? And to have an unfiltered conversation with the witness trying to get information. And it's not checking the box. It's not they get the answer, however, there is follow up. Sometimes tag teams among several lawyers, Involved representing the committee. And it is it is not a nothing burger. I mean, I trust certainly folks that I've got with I trust that I trust that SLC that you're that you've been involved with. I think the idea is, you know, and make it so that standard at a minimum, and the record is going to be known and everyone's going to know what the record is going to be. When we talk about the pot discovery, there's a lot of different opinions among the four. There are some vice chancellors that don't give interview memos. There are some do. And I think it would be very clear and helpful if there is a uniform standard sort of at the beginning of the investigation, everyone involve knows what's going to be available at the end of the And I guess, one thing I still can't come to grips with is why is it that in this country and many others, over hundreds of years of jurisprudence, adversarial sworn depositions have been identified as the most appropriate vehicle to investigate claims and prosecute claims. And yet, suddenly, in this context, we're going to go completely different direction. No longer and I think before that that's not a good way of getting information. But as I think about it, one of the big problems, I think is the problem of you know, like if you go down this path and if you let the plaintiffs in the room win their interviews. Then you've got to let all the defense lawyers in to all the interviews, not just the what's words our client, right? Because that would be completely unfair. Yeah. And just really quickly. I'm not sure we're suggesting that the plaintiffs have to be in the room. We would love to be. But at minimum, maybe take a transcript, maybe square them in. I think that would be a big step forward. I think we'll be struggling with them. These are perspective. I'm not sure interpret you just gave, but I struggle to understand how a witness fact witness, particularly the defendant cannot sit under oath and engage with an LC honestly and need to tell the truth, refuses to answer as a defense counsel that threatens to walk out. How that case should not go forward? I struggle to understand that. I, you know if that happens, right? The LC is going to say the case go full. That would be my I mean, if the key witness doesn't talk up, right? I mean, that's what I will say is I'm not saying deposition and everything you're saying I think valid point, especially the record part of it. I can't what you're saying there. But what I will say is there there are credibility determinations happening every minute and what's interviewed. And, you know, you could have a deposition that goes the way we've all been just discussing that obviously would reflect upon the witness's credibility. But that's not the only way for a witness to portray a lack of candor in the course of a discussion. And by the way, they don't be under oath. People lie all the time, sadly, under oath. And they lie when they're not under oath. And part of what the committee is doing is trying to assess when they're being told the truth in. There might be better ways to sort of get it in a free flow conversation that would never work as a deposition, but does work in the course of the way humans typically relate to one another. And depositions aren't that. And so, you know, if you're in a mode, where you're relating to someone the way you typically would. You make those judgments all the time when you're talking to someone. Am I being told the truth? Are they holding something back? It is a more natural way, I think, to assess that. I don't think it serves the purpose that you're talking about, which is to preserve it. And I get that and I hear what you're saying. Let me use another example of something. So You know, I think Plaintiff's attorney sometimes the law firms represent SLC, he's having sort of two different personalities, right. And so I'll use Quin earlier. I'll use my co counsel, Q. They are the most thorough scorched aggressive law firm. Many of you have litigated against them. They're excellent law firm. Do they get text messages when they're litigating against somebody. They're the SLC, There's comment in the report that says, well, they said they didn't use. So that is to me, a bright red flag. There is a difference between how someone litigates a case? How someone conducts an investigation for an SLC. And the transparency ideas that we're promoting, get rid of that. The solve the problem and putting everyone on the same page. I would think by removing some of the games at least the plaintiffs. Yeah. And look, I hate to keep using this word, I'm sorry, balance. There has to be some balance between doing a thorough SLC investigation that isn't full blown discovery. That isn't going down all the radicals that one might go down in discovery and hopes that, you know, some of them will yield results as opposed to be method more focused and trying to be more efficient in the SLC process. And, you know, that That is a challenge. And one thing that SLC is for sure, no. The continue prestige point is the thoroughness of the investigation is going to be front and center in the event that a motion be turned on. So, you know, are practices evolving as a result of that, probably some might be given the nature of the challenges that are being raised now with regard to the process of the investigation. I'm wondering how you see the recent match rolling on the importance of every member of a committee being independent. How if at all, do you see that impacting the SLC S? Yeah. Look, I mean, I'll just say it if the SLC members aren't independent, they have failed prong, and it's not a majority of them. I think we match looked at the special committee in that context. I think you can go back to papa contempt committee members will be independent. Period heart style. And if you are able to undermine that independence as part of a challenge, then I think you have satisfied Papa as a basis to challenge any recommendation that the committee made? I totally agree with that. Yeah. Raises an interesting question to be conservative. You wouldn't want to be the test for that. Yeah, but I think I think it's answered in Zapata itself. And I think there is this may be what Your Honor is referring to, but I think there's actually another nuance or wrinkle to the SLC process, which makes independence that much more important. And it's this overarching governing principle inherently Zapata, that you are asking a human being to do something very difficult, which is to sit in judgments and render judgment on their peers. And Zapata itself says, the question naturally arises, whether there but for the grace of God, I empathy might not play a role. And the further question arises, whether inquiry as to independence, good faith, and a reasonable investigation is sufficient safeguard against abuse, perhaps subconsciousness. And so one I'll call it a question. It's kind of a concern that I have is whether recent SLC jurisprudence has kind of lost sight of that very simple, but I think vitally important human propensity to feel this way and be conscious or subconscious abuse that Septa itself expressly cautions is a byproduct. Yeah. I mean, Justice en when I talked to him about Septa, I think he Very much emphasize that part of the decision that recognizes how human actors naturally or subconsciously might be persuaded in a environment where they're being asked to pass judgment on their peers. Very difficult for sure. I to tie this back to something we're discussing earlier, the sort of more subjective factors considered by the SLC. I think the farther away you get from empiricism, the higher the risk that this sort of con subconscious bias or abuse could occur because no longer are you looking at, well, the value of the claims is 100 million or we're going to have a 120 million of reputational damage. Now it's something very fuzzy. And I think that is the devil's playground when it comes to that subconscious. Maybe. But I mean, you have to have faith that directors are doing the right thing and that they're not acting I mean, if they're not facts to suggest that they're not independent or not disinterested, I think you give them the benefit of the doubt that they're using their objective judgment in reasonable way. I would argue it's just the subconscious aspect. We're not saying they're doing anything wrong and it's saying it's a pole saying, sometimes you don't know what's actually going it's your decision. Right. Benson allowing humans. I mean, they're they're allowing this notwithstanding that they they say that's a risk, they're allowing it to work this way and setting it up. So I think I mean, you just can't assume that oh, this can't work because of subconscious motivated. Yeah. Yeah. So I think we've been going for about an hour. I don't know if we want to take questions and people still have things they want to talk about. I feel like Elena in particular, maybe got the short end of the cafe. Yeah. I think the only thing I wanted to say that I don't know. A lot of what I wanted to talk about be covered, but one of the slides, I think perspective that I think might be interesting for people to hear is that an SLC is not always even beneficial from a company's perspective. So that is to say, just because plaintiff gets by a motion to dismiss, there's always it's not always going to be in the company's interest to form an SLP. So to just kind of tick through some of those reasons. Often a company if they want to have an SLC they might need to add additional board members to the point where we were just talking about to make sure that you have board members who are sufficiently independent and disinterested and that can be a costly process. It can really protract things, you know, if you have an SLC, the process takes several months and then the process of the motion to terminate that you mentioned you mentioned Blue Bell and Ogle? Yes. And you know, both of those Ogle I don't actually remember case went on, Bluebell, what has it been five years? And they're just now that we had to look it up. We all said whatever happened to Bluebell, I can tell you the Ora case when I first got involved, I think it was seven years ago. And so Okay. Not all of that was the SLT process, but some of it was. And so it really I think it's been hugely I don't represent the company, but you know, obviously, it's been very expensive. The SLC is paying the SLC members, usually it's paying the SLC lawyers, paying experts, it's paying document vendors. It's just a hugely, hugely expensive process. And then maybe they do the same thing over again the litigation continues. And the company I think I alluded to this before, but, you know, SLC process is working correctly, the company and the defendants certainly are giving up control of the litigation. There's no guarantees about what the SLC is going to do. You sort of do your best to cooperate with the SLC and hope you know, that they make a recommendation that's helpful to your clients, but that's not always going to be the case. And so it is a real giving up control. And then there's no guarantee that the board is going to accept LCs decision. And you think it might have been 2003, not 2004. It was. And that's what I'm wondering. I mean, that's pretty close to a guarantee when there's a sample set of one that happened 20 years ago. Yeah. Fair enough. But I mean, you just never know. There's no guarantee. Take. The more and more LC you're a defendant, you get a shock convince the SLC not to do anything in case. You don't even have to go under oath. So it seems like. No, it's not. It's hugely hugely anxiety provoking for clients. It takes a lot of time. It's very expensive. It's hugely distracting there on the books now, you know, you get sued, you'd like the case to have finality and be over with. It's not always like a great day for the Defendants that something is going to take years and years to sort of clear your name. It's not it's not sort of like, Oh, great, there's an FLCs's complicated and difficult situation. So I just I just think it's important to understand that from the defense perspective, it's it's tricky and anxiety provoking and not always a simple situation being. Got to be better than being deposed by Joel Freeland. I never been deposed by Yes. I think I see your hand. Is that you? It is. We talked a little bit about the implicit bias of the bias and they go into the SLC member as they approach their before race go. But what would it do to the board's dynamic where you have an SLC member that comes and does the investigation in? All are wrong. You'll are guilty. The company needs to sue you. How does the board go back to functioning properly once that bond has been dropped? I mean, if you don't know you've had that personal experience, but how does that impact sort of the board's dynamic and should that be a concern when looking to give sort of deference to the LCs decision to terminate? I I wasn't involved in the case, but I know our firm represented a special litigation committee in the Tilley case that ultimately recommended the fairly sizable settlement of the claims engaged with the defense. And I asked that question, how did how did the Board react to that? What I understand is you know. They just moved on. Part of the reason the board members who were on the committee were chosen is they're not social friends with the folks that were defendants in the case. There was not a relationship beyond an arms lang board relationship, and, you know, that continued. But I hear what you're saying. That's a pretty awkward situation. Entirely different because it was the company got acquired and it was a fully new board. So you didn't have that dynamic at all? In Kiley Yeah. Yeah. I that could be. But as I understood it, at least in the midst of dialogue and the settlement, the Board continued to function and functioned as a board. Right. But my understanding is that defendants were not on the board at the time. A time at the settlement? Yeah. Which to me, then really when you cite Tilly as an example of an SLC pressing for a reasonable settlement, it really does suggest to you maybe these other considerations play in the normal instance where the director stay on the board and they're facing down. The CEO who they're going to sue and they have to work with them for the next five years while the litigation has happened. I think Nort it. I just had I think David, you might have been on the other side of a matter that we had not that long ago where two independent directors were appointed as an SLC and they ultimately we investigated the claims and ultimately recommended a pretty sizable settlement. And look, I'm going to be honest, it did put them in an awkward position at board meetings, right? I mean, they're getting pressed by their fellow directors who think the claims are bullshit. At the same time, you know, they're investigating and with the help of good lawyers who are looking at and saying, well, maybe not, right? And you're kind of there's a little bit stuck in the middle of it, but at the end of the day, I think when in that particular instance, where the matter gets settled, they do move on and they try to work together. And I I don't I don't think it's, you know, I don't think it's unusual that there would be that tension, but it's not like they're not buddy buddy and and and I think they really, you know, they they try to do the best they can, right? I mean, tough tough personal dynamic. Attention is at the heart of Zapata I have one other comment mark, which is on the on the minutes versus, you know, a transcript of an interview. I've I've had personal situations where my interview notes became the subject of a criminal prosecution of a CEO of a public bank holding company which led to me getting an invitation from a federal court in Alabama to go to be the star witness for the criminal prosecution of the CEO. And I don't know, of course, in that circumstance, the person taking the minutes of my interview was a guy named Colm Conley. So it's a pretty good person to have as my minute taker. But I will just say that we really do try to be fair arbiters, and I don't think we would have gotten the stuff that led to that person's prosecution in a deposition. I don't even know if you would've sat for a deposition. So I will just say I think it's the process actually works. Leads me to a question about, you know, you made an excellent point about how this raises some degree of concern among the board, would you have an SLC going and Bill's point about the potential fallout. A number of years ago, I used to represent SLCs and I also represented defendants from time to time. And as I paced out of that practice, I saw an increase in insurance counsel in mediations demanding that there be SLC proceedings before the mediation would go forward in a meaningful way. I'd be interested from the perspective of those of you who practice with boards and with SLCs whether you're seeing insurers press for SLCs or whether that was a modest tie that sort of subsided because I don't understand honestly, why we have so many SLCs compared to why we did ten years ago. I have not seen that myself. And I think I agree, we are seeing more of them. My sense is there be more on Ford's radar and it's in general counsel. And it's just something that probably more general counsel Ford just something that on plaintiffs get packed motion to dismiss, it's something that general counsel sort of bring up. Elena, do you think that's because they're more aware of the availability of SLC or because they're looking at the phenomenal track record of SLC recommendations being signed off on. Okay. So I don't, sir. There I think they're aware more awareness. Okay. I'm not aware of that dynamic, but I can't say that my experience is broad enough to know if it's a thing or not. Can I ask one follow up question for you, John? With all due respect, English language. I'm just hoping that question is going to someone else. I think you said with all due respect, Your Honor. Okay. Earlier about text messages, which you definitely slotted to the side in Rabbit holes and elsewhere. Question, as a matter of current practice, are SLCs typically asking for text messages and are you getting them and if not, why not? And I'll show up it. Thank. I think especially for those who were directly involved in the events in question, the answer is yes. For not necessarily for all board members who were present, but not involved directly. But you know, the practice evolves and certainly, there has been a theme in recent cases where plaintiff's counsel has raised concerns about the lack of more fulsome collection of text messages. And Okay. Doing this kind of in reading those cases, you would see that and say, okay. That suggests that that practice needs to be revisited. I can say from a defense perspective where my clients are defendants in cases that have SLC square producing techniques. At. So Greg mentioned that you used to represent a lot of SLCs and I suspect that work has probably trickled off for you in recent years. It's weird. And I've actually asked SLC members. Did you talk to Dame Greg aro who wrote a book called special committees and your name never came up, surprisingly I asked the panel, what do we do about the fact that I have never met an SLC member who has ever interviewed a true plaintiff firm, knowing that lawyers like directors also come with subconscious biases. And you have folks in this room who are some of the best people in the world at monetizing litigation assets for b. Okay. Well, it's when not a Plaintiff's firm. They occasionally do very high value plaintiff work, but they are a defense firm. Asset? That's a very interesting question, Jo. I mean, it's the same reason why sometimes you talk to people at the SEC and say we would never hire a plaintiff's lawyer, even though we do the very things that. I think it's general I think ten years ago, the plaintiff's far was perceived differently than the plaintiff's far is now. But we have folks in this room who rested $59 billion from Elon Musk, and it's hard for me to believe that they would not be strong candidates to actually monetize any litigation asset, and yet I have never heard an LC member interview a plaintiff's lawyer. Certainly we're available like hourly work. We don't want to get paid on a basis the follow up question, similar to that isn't there a dynamic problem here at least this distrust by the plaintiff bars in my view, mindset problem and a skillset problem is leading to lower recoveries when you have it and you generally have a defense firm running this. These are people that are generally spending their day thinking about how to dismiss claims, not how to prosecute them and recover them. They're not the ones that are typically going in, looking at documents, thinking, how can I really build this case? They've probably never deposed a hostile corporate CEO and had to deal with them to deposition. And so how do they really have the mindset and the skill set to be as good as a plaintiff firm? And how do you deal with that and why should the Court taking that into account? I mean, I'll start and then maybe Vice Chancellor can add to that. I think a lot of us on the defense side, we've handled plaintiff's cases as well. We like to think that we're litigators and we can see things from both sides. And again, going to the objective here, I don't think the starting off point for SLC is I want to go in and figure out how to best monetize this asset. It is figuring out what is the best I mean, I think that's part of it. So but I think there's other considerations as well, as I said at the beginning, and trying to figure out what to do with the asset. And if it is something that should be pursued in a litigation, and maybe maybe there's a thought that, you know, if you have a plaintiff's lawyer do this, then you know where it's going to end up. And maybe that Okay. Why? Why? I don't know. I think to D point, I don't think I don't think you guys are I mean, I don't know if people are just thinking about it. I think it's just natural for companies who are the lawyers that we usually go to list are we less capable of acting as fuciaries for the corporation when representing what's that? Are we less capable of making those acting as fciari sing off my head. I probably no one even ever thought about it. I draw but they draw the suggestion that they know where it's going when a plaintiff's lawyer, you know, a if we say we know where it's going when a defense firm is retained, that somehow. Well, no. I'm responding to the fact that someone said we know how to monetize assets. Why get the best I was responding to that. No. I'm just saying it's fair it's fair. I'm going to bring because that's the standard, right? And so all of these things matter. I want to use Baker Hughes as an example. The judge that wrote the opinions right here. So be respectful of everybody as well. Lawyers in that case, energy products out in Texas. The claim was about whether Texas energy company should be suing GE, which has tons of operations in Texas. That to me is a relevant factor about, you know, it's not about casting aspersions on counsel or people not doing their jobs. It's the law recognizes that people behave in certain ways based on things that influence their lives. All of these things need to come into play and be thought about. And if the plaintiff is able to show the existence of one, well, it really is the burden should be the burden is on the SLC. If the SLC cannot demonstrate the absence of a single material fact issue. The case needs to go forward. I don't think that's how that part of. Looking at it rally. Well, no, I mean, I don't think it's like you find one little factual dispute. Material material. Right. I mean, but it seems like the court sort of look at it. As a whole material fact dispute as to whether this analysis. I don't disagree with that that's necessarily wrong. I think what plaintiff's firms are feeling and seeing right now is to get over one of these SLC motions, you have to come up with the most, you know, to identify. And we do feel like the burden is on us, by the way. Okay an egregious or obvious misstep. And that is not the standard. Yeah. And I have concern. I mean, as SLC is become increasingly ubiquitous, I think I worry that folks are losing track of the fact that I think Louis quaked about this, the 1985 Chancery Court decision, saying that the SLC mechanism is the only instance in American jurisprudence where a defendant can free itself from a suit simply by forming a committee and reviewing the allegations of the complaint. So to use the vice Chancellor's terminology earlier, like, this is a RR Addis. This is a very unusual, unique thing, and it is a powerful weapon. And I think Rule 56 is maybe the antidote against that, but it needs to be faithfully applied. How is the defendant bring itself? Well, you'd have to ask the Chancellor Court in 1985 to get So in and just say, I go back to Bob. And you think that Justice Quilln saw the SLC as rising above two distinct factions with their own incentives. Defendants are interested conflicted directors and plaintiffs lawyers and stockholders who have brought the case derivatively. The SLC is supposed to independently review these things exercising fiduciary duties in doing so. When fiduciaries are exercising their duties, that's important. Should be important to them. I think it usually is. Should be important to the advisors who represent them. I haven't been a lawyer in a long time, so I can say to what I'm doing with any particular perspective. I was a judge for almost 19 years, tried to be fair and objective. If I failed, it wasn't for lack of With that said, I think that lawyers representing SLCs know what their ethical obligations are and know what their duties are to the client, which is to help these fiduciaries discharge that obligation that they take A fairly and objectively as they can. If they fail in that, Spata allows a process to expose that and undermine their conclusions and have the Court ignore the conclusions entirely. This idea. And I get it. Involved. But this idea that anyone who advises an SLC has a result in mind before they start that shouldn't be the mindset. Whether it's a plaintiff's firm, representing an SLC or a defense firm. The mindset ought to be to try to get to an answer that serves the best interests of the corporation. Fundamentally, that's what Zapata said, This is all about. And I think both firms, both sides of the V, if they keep that focus in mind, are fully capable of discharging that obligation. Plaintiffs firms, defense firms, firms that don't know what they are. A couple of questions. I mean, I hear a lot of the commentary, and I think people come at this with the idea that an SLC automatically is going to translate into a motion to dismiss the claims. And I haven't seen an empirical study. I don't know if anyone's aware of one. I'd be worth doing, actually, to find out how many of these actually result in a motion to dismiss versus settlements, where real value is extracted from the defendants. And frankly, the plaintiff's lawyers benefit from that too because they get a fee based on that as well. My guess is you will find that motions to dismiss are still in the minority of all SLC investigations that are out there that have been done in the history. I know just my own personal experience. I've probably done one every three years, it seems like. I'd say half of them resulted in settlements where plaintiff's lawyers taking over the claims. Half of them may have gone to dismissal. So it's not a foregone conclusion by any stretch that it's just going to go like it's on the railroad to a dismissal motion. I think it's just an unfair starting place if you have that mindset. I just don't see it that way in the real world. It's my own experience. You'd like to volunteer at Associate? I would love to do that. I think I think project bipartisan study of this issue because I would like to see I think there would be good data to be lined on that. Okay. I'll give you a call with the associated viewers of this. Write the article I don't remember if this ends at street 20 or three 30. Lisa, did you still have more time? 30. I asked one question to folks and you know, match was interesting at all sorts of levels, the discussion of you refer to the erst? Earlier, you mentioned controlling stockholder cases maybe not seeing what Sea had in mind. And yet what Match now underscores is that 23.1 and the analysis there shouldn't be influenced by the ultimate standard of review that's going to apply and adjudicating the fiduciary breach claim. I'm wondering if that paradigm that has been laid out suggests that the SLC process, which is sort of an offshoot of 23.1 is presumed to work in any instance, regardless of the standard of review or regardless of the underlying nature of the claim? Well, before I pass this over to, Okay. I don't think I don't think wise I don't think plaintiffs are opposing that's part of the overturn that the process limited in some way or change or that there would be a bright line rule that certain cases are just not approve. I think textual I think the speaker today, I'm sorry. Mr. Cunhan was Talking about how one of the great things about Delaware is that it has the flexibility to sort of go case by case, context by context. And what I would urge sitting here as plaintiff's lawyer is that that context is super important gets you have a case where, you know, it's a transaction that's subject to entire fairness where there are interesting facts where the court's already blessed it where it's gotten over 23.1, that should be that should go into a column somewhere where it should be on the scales. And you know, I think that that's likely a prom two issue. And even where, you know, someone has satisfied environments. And you look at the case, this is really a case that a court needs to take a look at because the process of Spata all the things that we've been talking about. No one's gone under oath. Don't have all the documents. There's there have been no adversarial depositions. Is this really the type of case that should be dismissed for nothing? And it's that g. And I know you take issue with nothing. I sorter that. But the sort of give get analysis, I think is very much in part. Okay. We have another. I think that's Judge. This is for the former vice chancellor with his SLC counsel had on. And it's really I think goes to why there is a level of mistrust on the plaintiff's side, which is when you're acting as SLC counsel, do you sort of ensure that the plaintiffs get the same level of information that the defendants do? Or is there a lot more information that goes to defendants about how the process is being conducted and underlying substantive information. Great question. I think that implicitly, maybe defendants are able to track the progress of the SLCs investigation more than the plaintiffs because the requests for information are being directed to the defendants. And so they know the flow of documents that's come in. They have some sense of where the SOC is. They're helping to arrange interviews. For example, company counsel is. So I guess in that way, they are probably tracking the SLC investigation more so than the plaintiffs are. What I will say is there is no at least in my experience, no disparate flow of information going the other direction from the SLC to counsel. I don't I don't think defense counsel is getting anything that plaintiffs aren't getting her vice versa in my experience. I challenge that a bit which is so to me, it seems like the defense counsel are sitting in on the interviews, right? So they understand what happens in the interview, isn't that the normal experience? For their clients? Yes. And they likely have joint defense agreements with the other defendants, right? So they're all sharing information about what's happening in the interviews, right? Okay. That I don't that makes sense. I I don't I don't judge that probably sapped. And so they know in real time what documents are being requested. And separately my experience is in mediations as well, the defendants are getting the mediation statements, information about expert reports, that level of information. Is that shared with the plaintiffs as well or not really? So let me ask I'm not sure I follow that last part. Expert reports. Well, so I'm saying in the mediation context. Speak to me. It's typical that the SLC defendants litigation put forward the best their best foot forward, puts forward their valuation analysis of the claims. All that goes to the defendants. And my senses, at least in the cases I've had none of that even in some filtered way, goes to the plaintiffs that I'm asking, as an SLC counsel or if you're putting your SLC member hat on even, does that make sense? Or should you be really trying to balance the information flow? If you're trying to create a situation where going back to the term you've used balance and trust, I think that drives a lot of it from my experience. That's a good point. I mean, the The information flow that you're referring to is really more practical and facilitated as opposed to the SLC choosing to give certain information to the defense counsel. But are you are correct. They're at interviews where you're not there. And we're not asking typically plaintiff's lawyers to give documents, but we are defense lawyers and they know what documents we're asking for they know what documents they're giving us. So I I agree there is disparity in that sense. Yeah. My sense also is like even after the interview, the defense lawyers follow up and say you asked these questions. Let me present you with this information about it to further inform your views. All of that in real time, the plaintiffs are not involved in. I just have a question as to whether that's a real problem with how well the process functions, as well as what the level of balance and trust is. Yeah. So that latter part where there's follow up. I I typically am not interested in that Defense counsel wants to call and say, let me explain what my witness just told you, that's not terribly helpful to me because I just heard what the witness said. But I I get you. There is there is disparity and that's a point I hadn't focused on. Yeah. I don't suggest maybe thinking about it and trying to think about how to reinvigorate SLC process, thinking about information flows as you think through it. Justin in the building. The hook. Very interesting and dialogue that I'm very take time out. And for the audience. There were a lot of great and protection. Thank you, everyone. Thank you You Conaway, for offering your Cunningham to O thank you so much for arranging for us to young fabulous and very much appreciate it. And I also want to thank the audience as is. And the audience, both in person and virtual audience. Thank you all for attending.
Zapata and Special Litigation Committees: Perspectives on What’s Working, What’s Not, and How We Can Improve the Process” (April 11, 2024)
From Nicole Rich April 19, 2024
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This panel was a ninety-minute interactive event. Panelists from a wide cross-section of
perspectives discussed Zapata’s two-part
test for assessing a Special Litigation Committee’s determination to terminate
a derivative action. They explored the
composition, purposes, and authority of Special Litigation Committees (SLCs);
the initial purposes of Zapata and its evolution over the past 40 years; and
whether Zapata is working as intended or needs to be revisited. They discussed practical takeaways for SLCs
and lawyers on both sides of the “v” as they worked through these issues. Moderated by
Christine M. Mackintosh, Co-Chair of the Chancery Litigation Group at Grant
& Eisenhofer, the panel included:
- The Honorable Joseph R. Slights III, Partner, Wilson Sonsini Goodrich & Rosati and former Vice Chancellor, Delaware Court of Chancery
- Elena C. Norman, Partner, Young Conaway Stargat_t & Taylor
- Mark D. Richardson, Partner, Labaton Keller Sucharow
- David F.E. Tejtel, Principal, Friedman Oster & Tejtel
- Tags
- Department Name
- John L. Wenberg Center for Corporate Governance
- Date Established
- April 11, 2024
- Appears In
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