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Heavily redacted report cannot hide behind business-judgment rule

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Although a report produced by a special litigation committee contains privileged information, the plaintiffs must be allowed full access to the unredacted version in order to determine if the investigation was extensive and conduced in good faith.

The Indiana Court of Appeals affirmed the trial court’s order in TP Orthodontics, Inc., Christopher K. Kesling, DDS, MS, Adam Kesling, and Emily Kesling, Individually and derivatively on behalf of TP Orthodontics, Inc., v. Andrew C. Kesling, et. al., 46A03-1207-MI-324.

The trial court compelled TP Orthodontics to file a copy of the entire report produced by the special litigation committee.   

TPO’s board of directors established the special litigation committee after the three sibling shareholders filed a lawsuit against their brother, Andrew Kesling, on behalf of the family business TP Orthodontics.

The committee investigated and then issued a report recommending pursuing only a few of the siblings’ claims. In accordance with Indiana law, TPO filed a motion to dismiss the rejected claims and attached a heavily redacted copy of the committee’s report.

Subsequently, the siblings demanded access to the unredacted report. TPO refused, pointing to Indiana’s business-judgment rule.

This rule allows courts to inquire into a committee’s investigative procedures and methodologies but not into the substance of a committee’s decision. TPO argued that by requesting the unredacted report, the siblings sought to go beyond the bounds of permissible access under the business-judgment rule.

Indiana Code 23-1-32-4, which codifies the business judgment rule, sets forth the presumption that corporate directors act in an informed, good faith, and honest manner when managing corporate affairs.

Plaintiffs are allowed to challenge a special litigation committee’s findings only on the grounds that the committee was not disinterested or did not conduct its investigation in good faith.

The Court of Appeals agreed with the trial court, finding that access to the entire report is necessary for the siblings to make their statutorily allowed challenges, most notably their good-faith argument.  

“In closing, we acknowledge TPO’s concerns about potential implications of our holding on the business-judgment rule, but we do not share them,” Vaidik wrote for the court. “There is no reason to believe that simply allowing derivative plaintiffs access to committee reports will lead to trespass into the domain of business judgment. We are confident in the ability of our trial courts to interpret Indiana’s business-judgment rule and reject claims that threaten to emasculate that rule.”


 

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  1. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

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