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Special litigation committees can play a helpful role in addressing derivative claims in situations where a plaintiff has established demand futility. That committee has to be comprised solely of independent and disinterested directors, but there doesn’t have to be a room full of them in order for a company to reap the benefits of such a committee.

That point was reinforced by the Delaware Chancery Court’s recent decision in In re Baker Hughes, a GE Company, Derivative Litigation, (Del. Ch. 4/23), where Vice Chancellor Will granted a motion to terminate a derivative action based on the recommendation of a one-person special litigation committee, even in a situation where that committee’s process wasn’t pristine:

To be sure, the committee was imperfect. Having a single member is not ideal. Nor is the fact that the member exchanged a handful of messages with an investigation subject. The committee’s report also omits any discussion of the potential transaction advisor conflicts it investigated. But despite these flaws, the committee’s independence, the thoroughness of its investigation, and the reasonableness of its conclusions are not in doubt.

– John Jenkins