Chaile Steinberg v. Andy D. Bryant
CA 2017-0736-SG
| Del. Ch. | Dec 7, 2017Background
- Plaintiff Chaile Steinberg, a McKesson shareholder, filed a derivative complaint under seal alleging McKesson’s board and senior officers breached fiduciary oversight duties related to opioid distribution.
- Plaintiff claims McKesson failed to detect or report suspicious opioid orders after a 2008 regulatory settlement, leading to further regulatory settlements in 2017 and potential civil liability.
- A redacted public complaint was filed; two reporters (CBS 60 Minutes and Charleston Gazette-Mail) requested unredacted access to the complaint to support investigative reporting on the opioid crisis.
- Plaintiff stated the redactions likely did not qualify for continued confidential treatment but declined to take a position on release because of a confidentiality/nondisclosure agreement with McKesson.
- McKesson did not oppose public filing of the unredacted complaint; no party sought to maintain confidentiality under Court of Chancery Rule 5.1.
- The Master in Chancery reviewed the redactions, found no good cause to keep them sealed, and recommended the Court order Plaintiff to publicly file an unredacted complaint by December 8, 2017.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the redacted portions of the derivative complaint should remain under confidential treatment | Redactions do not meet requirements for continued confidentiality but plaintiff declined to press release due to NDA with McKesson | McKesson does not oppose public filing of the unredacted complaint | Court may order public filing; redactions do not merit continued confidential treatment |
| Who bears burden to justify confidentiality under Ct. Ch. R. 5.1 | N/A (plaintiff acknowledged redactions likely unjustified) | N/A | The party seeking to maintain confidentiality bears the burden to show good cause; no party met that burden |
| Whether a confidentiality/nondisclosure agreement compels sealing | Plaintiff argued it constrained his position on release | McKesson waived opposition to public filing | NDA does not automatically justify confidentiality absent Rule 5.1 good cause |
| Whether reporters have public-access entitlement to unredacted complaint | Reporters argued public interest in opioid reporting warrants access | No party opposed access | Master recommends granting reporters’ requests and unsealing complaint |
Key Cases Cited
- In re Caremark Int'l Deriv. Litig., 698 A.2d 959 (Del. Ch. 1996) (establishes directors’ duty of oversight)