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Oklahoma Firefighters Pension Retirement System v. Corbat

Court of Chancery of Delaware

November 15, 2017

Oklahoma Firefighters Pension Retirement System, et al.,
v.
Michael L. Corbat, et al.

          Submitted Date: August 1, 2017

          Stuart M. Grant, Esquire Nathan A. Cook, Esquire Rebecca A. Musarra, Esquire Grant & Eisenhofer

          Stephen P. Lamb, Esquire Meghan M. Dougherty, Esquire Paul, Weiss, Rifkind, Wharton & Garrison LLP

          Donald J. Wolfe, Jr., Esquire T. Brad Davey, Esquire Tyler J. Leavengood, Esquire Jay G. Stirling, Esquire Potter Anderson & Corroon LLP

         Dear Counsel:

         Before me is the Defendants' motion to maintain the confidential treatment of redactions to the public versions of the Amended Supplemental Complaint and briefing on the Defendants' Motion to Dismiss. Also before me is the request by a reporter for the Wall Street Journal to lift the confidentiality of these filings pursuant to Court of Chancery Rule 5.1.[1] The matter involves stockholders purportedly suing derivatively on behalf of Citigroup Inc. ("Citigroup").[2] The Complaint and the briefing on the Motion to Dismiss refer to documents received by the Plaintiffs pursuant to a request under 8 Del. C. § 220.[3] Those documents themselves were subject to a confidentiality agreement when produced.[4]

         Rule 5.1 starts with the premise that the public has a right to monitor proceedings in this Court and that all filings are presumed to be public.[5] Rule 5.1(b) provides that confidential treatment may be maintained where "good cause" exists, "good cause" being determined by the Court after weighing the harm that would be caused by public disclosure against the public interest in access to court filings.[6] The Defendants suggest that such a weighing here should result in confidentiality being maintained. The Defendants point out that this matter involves oversight by the Directors of the affairs of Citigroup and the compliance of those affairs with law. The Motion to Dismiss turns on whether the provision of such oversight by the Directors demonstrates lack of good faith. The Defendants argue that the redacted portions of the Complaint and the briefing are not necessary for the public to understand the nature and ultimate resolution of their claims, and thus that the public interest in disclosure is entitled to little or no weight. I disagree. The public, particularly the Delaware public, has a strong interest in the workings of a Delaware entity and its compliance with substantive law.[7] The question for me is whether confidentiality is nonetheless in the interest of justice, because the harm of disclosure outweighs that public interest. At oral argument, counsel for the Defendants suggested that it did so and that the interest represented would never become stale- that portions of the Complaint and the briefing now sealed should remain so sealed, forever.[8]

         Specifically, redactions in the documents at issue involve communications between Citigroup's management and its Board of Directors concerning its compliance with law and with regulatory consent orders entered in 2012 and early 2013. Some of the information thus removed from public consideration is at least seven years old. The Defendants contend that making redactions to the documents public would reveal "Citigroup's present and continuing BSA/AML internal controls and compliance protocols, which have the goal of safeguarding the U.S. financial system from illicit financial activity."[9] And they suggest that "[p]ublication of the details regarding Citigroup's efforts to combat such activity- and the potential shortcomings in that effort-is at odds with that goal."[10] Finally, they argue that publication may also harm the Citigroup Board's ability to receive unbiased advice from management and employees. To the extent this is true, the interests are not insignificant. However, it seems to me unlikely that the references in the pleadings to internal procedures and reports which are now several years old can have the adverse public and private impacts described. They may perhaps be embarrassing to the Citigroup Board or management, but any cognizable detriment represented by reference to such stale documents is unlikely to outweigh the public interest in these proceedings.[11]

         Having so found, I must deny the Defendants' motion, at least in part. Prudence dictates, however, that I direct the Defendants' Delaware counsel to review the redacted portions of the Complaint and the briefing (excluding the exhibits thereto), and to designate for continued confidentiality only those that involve current procedures, revelation of which poses a substantial risk to "the goal of safeguarding the U.S. financial system from illicit financial activity, "[12] if any such risk exists, or risks outing of current proprietary information. The period for such a review will be twenty (20) business days from the date of this Letter Opinion. At the end of that time, the Defendants should work with the Plaintiffs to file public copies removing all other redactions. I will then review any continuing redactions for which the Defendants allege further confidential treatment is required. To the extent that the foregoing requires an order to take effect, IT IS SO ORDERED.

         Sincerely,

          SAM GLASSCOCK III VICE CHANCELLOR.

---------

Notes:

[1] A request by the Wall Street Journal to lift the confidentiality of certain portions of documents referenced in the Complaint has been addressed by the Defendants, and is, to my ...


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