Espinoza v. Hewlett-Packard Co.
32 A.3d 365
| Del. | 2011Background
- Espinoza, a Delaware shareholder, sought to inspect one document under 8 Del. C. § 220: the Covington Report by HP's outside counsel; Covington Report was prepared during an internal investigation into sexual harassment allegations against HP's former CEO Mark Hurd.
- HP claimed Covington Report was protected by attorney-client privilege and work product immunity and declined to disclose it.
- Court of Chancery denied inspection, holding Espinoza had not shown essential need to override privilege/work product.
- Espinoza appealed, arguing the report is essential to understand the Board's deliberations and the for-cause decision regarding Hurd.
- Judge Jacobs and the Court affirm on an alternative ground: Covington Report was not essential to Espinoza’s stated purpose of investigating possible corporate wrongdoing, and HP had already disclosed essential information.
- Covington Report reportedly contained interim findings but did not discuss the for-cause issue; HP stated and the court assumed the report did not inform that issue; Board approved a separation agreement rather than termination for cause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Covington Report is essential to Espinoza's §220 purpose | Espinoza asserts the Report is central to understanding the Board's decision not to terminate Hurd for cause. | HP contends essential information is available from disclosed materials and the Report was not prepared to address the for-cause issue. | No; Report not essential to Espinoza’s purpose. |
| Whether essentiality precedes privilege/work product analysis in this §220 action | Espinoza relies on Garner-based reasoning to override privilege/work product. | Privilege/work product analysis is a separate inquiry; essentiality must govern the scope of inspection. | Essentiality governs; court did not reach privilege/work product. |
Key Cases Cited
- Grimes v. DSC Communications Corp., 724 A.2d 561 (Del.Ch.1998) (scope of 220 relief; essentiality inquiry precedes privilege analysis)
- Tackett v. State Farm Fire & Cas. Insur. Co., 653 A.2d 254 (Del.1995) (standards for work product—central/pivotal issue and compelling need)
- Sec. First Corp. v. U.S. Die Casting & Dev. Co., 687 A.2d 563 (Del.1997) (essentiality and necessity burden in §220 actions)
- Grubb v. City of Westlake, 1 A.3d 281 (Del.2010) ((example included in brief))