TP Orthodontics, Inc. v. Kesling
15 N.E.3d 985
| Ind. | 2014Background
- Siblings file a derivative suit challenging Andrew Kesling's control of TP Orthodontics (TPO).
- TPO's board forms a Special Litigation Committee (SLC) under Ind.Code § 23-1-32-4 to investigate the derivative claims.
- The SLC conducts a year-long investigation and issues a 140-page report; 120 pages are redacted for privilege/work product.
- TPO moves to dismiss or for summary judgment and attaches the redacted SLC report; siblings move to compel production of the unredacted report.
- Trial court orders production under seal; Court of Appeals affirms; this Court grants transfer to resolve competing interests.
- Court addresses: (1) access to the full SLC report to challenge good faith; (2) protection of attorney-client communications and work product.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unredacted SLC report may be disclosed under the business judgment rule | Siblings need full report to rebut lack of good faith. | Disclosure violates the business judgment rule and risks executive decision-making. | Remand for in camera privilege review; disclosure limited to non-privileged content. |
| Whether privilege prevents disclosure of the full SLC report | Privilege should not bar access since good-faith inquiry is at issue. | Report contains attorney-client communications and work product; waiver not established by good-faith issue. | Privilege applies; need in camera review to identify and redact privileged material. |
| What remedy best resolves discovery while preserving privileges | Full or substantial disclosure is necessary to test good faith. | Disclosure would undermine privilege and corporate governance policy. | Remand to conduct in camera review with steps to release non-privileged content under protective order. |
Key Cases Cited
- In re Guidant S'holders Derivative Litig., 841 N.E.2d 575 (Ind. 2010) (pro-management business judgment rule; SLC review standard)
- G & N Aircraft, Inc. v. Boehm, 743 N.E.2d 227 (Ind. 2001) (strong pro-management version of business judgment rule)
- Auerbach v. Bennett, 47 N.Y.2d 619 (N.Y. 1979) (limits judicial review of SLC procedures; assesses independence)
- Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (limits on business judgments; managerial discretion)
- Richey v. Chappell, 594 N.E.2d 443 (Ind. 1992) (discovery scope and protection of privileged material)
- In re TP Orthodontics, Inc., 995 N.E.2d 1057 (Ind. Ct. App. 2013) (SLC discovery and privilege considerations in Indiana)