Court of Chancery Denies Request for Two-Tier Confidentiality Order
In re Transkaryotic Therapies, Inc., C.A. No. 1554-N, 2006 WL 1388749 (Del. Ch. May 10, 2006).
Respondent in appraisal action sought two-tier, rather than one-tier, confidentiality order.
Parties in a appraisal action could not agree on whether the confidentiality order should be single tier or double tier. Respondent claimed that a two tier confidentiality order was necessary because: (1) its business related to research and development of pharmaceutical products and was highly sensitive; and (2) petitioners were significant institutional investors and/or market arbitrageurs who could make investment decisions based on discovery material.
The Court rejected both justifications. First, the Court held that a single tier confidentiality order would adequately protect the respondent's business information. Second, securities laws protected the respondent from the petitioners trading improperly on insider information. Finally, the Court stated that there were no extraordinary circumstances present justifying the added complexity and undue burdens of a two tier confidentiality order.