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In re Oracle Corp. Derivative Litigation11/24/2004
on California law - that was dismissed by Judge Schwartz the first time without prejudice - and that was dismissed by him the second time with prejudice after the plaintiffs' amended complaint failed to demonstrate to his satisfaction the viability of the claim - is to ask me to act as an appellate court over Judge Schwartz. Indeed, the plaintiffs ask me to conclude that Judge Schwartz was "mistaken" in his legal reasoning and therefore that I should "reconsider the issue" he previously decided adversely to them.
Because the plaintiffs here are obviously acting in concert with the California plaintiffs and using the very same lawyers who are litigating the derivative case in California, because there is no reason to believe that Judge Schwartz did not fairly consider this claim, and because the California plaintiffs have a full and fair opportunity to appeal Judge Schwartz's ruling after a final judgment in the California action, there is no principled basis for me to engage in a fresh trial- court examination of the plaintiffs' contract claim without violating principles of comity and inviting inter-state judicial conflicts that present a real threat of inconsistent rulings about identical issues affecting identically situated parties. The public policy of this State seeks to avoid the unseemliness, unfairness, and inefficiency that results when different courts adjudicate identical claims. At various times in this case, the plaintiffs have attempted to bypass this court and get a ruling in California. In this instance, they got not one, but two rulings in California dismissing their contract claims, and they are stuck with the dismissal order until it is reversed on appeal by a California court.
III. Summary Judgment Standard
To prevail on this motion, Ellison and Henley must show that there are no material, disputed issues of fact and that they are entitled to judgment as a matter of law. In examining the record, I must draw every reasonable inference in the plaintiffs' favor. If upon such an examination, I conclude that a rational finder of fact could determine, based on the record, that the plaintiffs have adduced evidence that supports a conclusion that Ellison and Henley breached their fiduciary duties then I must deny their motion for summary judgment.
Specifically, as I next explain, under Brophy there are two critical determinations that must be made on this motion about each of the defendants. First, is there record evidence that would buttress a rational determination that either Ellison or Henley possessed material, nonpublic information at the time of their trades? Second, is there record evidence that would support a rational finding that either Ellison or Henley decided to sell Oracle shares, in whole or part, because they possessed material, nonpublic information suggesting that Oracle would not meet its Market Estimates and that its stock price would fall? Before making these determinations, I must back-track and explain why I perceive these to be the key inquiries. That endeavor begins next.
IV. The Parties' Battle Over Brophy
The plaintiffs' claims against Ellison and Henley have their origins in this court's decision in Brophy v. Cities Service Co. In that case, a derivative action was filed on behalf of Cities Service against the confidential secretary of one of the company's directors. After learning that the company intended to repurchase shares of its stock, the secretary bought shares for his own account in advance of the company and profited when the company's repurchase program - which the secretary, but not the public, knew was coming - drove up the company's stock price.
The derivative plaintiff ar
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