concurring in part and dissenting in part.
The focus of this appeal as set forth in the majority opinion is the extent to which the media should be allowed access to certain documentary materials submitted under seal in the district court in connection with consolidated derivative actions in that court. While I disagree with the result reached in the majority opinion on the confidentiality question, and accordingly dissent therefrom, I think that the focus has been misdirected and that the confidentiality issue should never have risen to the level of being considered because, in my view, the district court misconceived the applicable law of Delaware under which the appellants (Continental) sought dismissal of the consolidated derivative actions. While I concur in that part of the opinion finding jurisdiction of the appeal, I respectfully dissent from the balance of the opinion for the reasons stated herein.
The appellants are Delaware corporations. Burks v. Lasker, 441 U.S. 471, 99 S.Ct. 1831, 60 L.Ed.2d 404 (1979), held that the authority of disinterested directors to terminate shareholder derivative litigation brought against some of the company’s directors and others is governed by applicable state law. The most recent pronouncement of the Delaware Supreme Court on a situation similar, but not identical, to that in the present case is Zapata Corp. v. Maldonado, 430 A.2d 779 (Del.1981). That case and Joy v. North, 692 F.2d 880 (2d Cir.1982), cert. denied, — U.S. -, 103 S.Ct. 1498, 75 L.Ed.2d 930 (1983), figure prominently in the proceedings both in the district court and in this court. These proceedings are sufficiently outlined in the majority opinion and need not be repeated here other than to emphasize that they involve an Independent Investigation Committee, the independence of which is not challenged, which sought under authority of Delaware law pursuant to the “Business Judgment Rule” to require the termination of derivative actions.
The derivative action has been termed a legal oddity “thought by many to be an endangered species as a consequence of the evolution of special litigation committees.” Joy at 885. Joy, however, as well as the decision of the district court and this court in the present litigation, appear to me to take any real vitality out of the use of the special investigation committees and to shift the endangered species status from derivative actions to the committee procedure directed toward them. That derivative actions should not be regarded favorably when in conflict with the business judgment rule seems obvious to me. As the court pointed out in Joy, 692 F.2d at 887, shareholder plaintiffs are quite often little more than a formality for purposes of *1317the caption rather than parties with a real interest in the outcome because at best they realize only an appreciation of the value of their shares which might be substantial in a close corporation but are of dubious benefit in the present case. The plain fact, as the Joy opinion points out, is that the real incentive in bringing the actions is usually not the hope of the return to the corporation but the hope of handsome fees to be recovered by plaintiffs’ counsel. Further, the Joy majority opinion observed:
Derivative suits may be brought for their nuisance value, the threat of protracted discovery and litigation forcing settlement and payment of fees even where the underlying suit has modest merit. Such suits may be harmful to shareholders because the costs offset the recovery. Thus, a continuing debate surrounding derivative actions has been over restricting their use to situations where the corporation has a reasonable chance for benefit.
Id. at 887.
Notwithstanding the expression of such a dim view of derivative actions, the Joy majority in a wide ranging, non-elliptical, dissertative opinion, dealing not with Delaware law but Connecticut law, and without any real pertinent authority from that state, ventured to predict as Connecticut law that there is no reason to treat the recommendation of such committee as having presumptive weight or to accord it deference beyond its inherent persuasiveness. The result of this conclusion was that a court should scrutinize the committee’s recommendation to determine independently whether the action was likely to harm the corporation rather than to help it. This, of course, results in the situation in which the committee found itself in the present case of having in effect to try the merits of the derivative action rather than going only so far as showing independence, good faith, and reasonable investigation, which latter standard is the view to which I subscribe and which I believe is consistent with Delaware law, whether or not it is consistent with Connecticut law which was not involved in the present case. Judge Cardamone in his dissent pointed out the speculative nature of the majority’s opinion in predicting what the Connecticut Supreme Court might do in the future. Id. at 897.
I am devoting some attention, perhaps more than it merits, to Joy because it in part relies on, but I think misreads, Zapata and because it figures so prominently in the majority opinion of this court. The Joy majority apparently had no difficulty in brushing aside what I regard as a well reasoned opinion written by Judge Hugh Jones of the New York Court of Appeals, Auerbach v. Bennett, 47 N.Y.2d 619, 419 N.Y.S.2d 920, 393 N.E.2d 994 (1979), applying the law of Connecticut’s neighboring state of New York to the recommendations of a special litigation committee. The holding in Auerbach was that the business judgment rule limits judicial scrutiny of the recommendation of special litigation committees to their good faith, thoroughness, and independence. Further, the court said:
While the court may properly inquire as to the adequacy and appropriateness of the committee’s investigative procedures and methodologies, it may not under the guise of consideration of such factors trespass in the domain of business judgment.
Id., 419 N.Y.S.2d at 929, 393 N.E.2d 1002. The dissenting judge in Joy would have adopted the Auerbach analysis. Both he, however, and the majority expressed the view that Zapata reached a different result in the committee situation in applying the business judgment rule. As I will explore more fully, I disagree that Zapata reached a different result.
Both opinions apparently thought, as the district judge here thought, that in the committee situation, even though it is an independent one, the Zapata “two-step” procedure was applicable which required in the discretion of the judge the exercise of the judge’s independent business judgment. In urging the adoption of the Auerbach rule Judge Cardamone aptly wrote of an *1318underlying policy consideration supporting the Auerbach decision:
Even more fundamentally unsound is the majority’s underlying premise that judges are equipped to make business judgments. It is a truism that judges really are not equipped either by training or experience to make business judgments because such judgments are intuitive, geared to risk-taking and often reliant on shifting competitive and market criteria. Auerbach, 47 N.Y.2d at 630, 419 N.Y.S.2d 920, 393 N.E.2d 994 (courts are “ill-equipped” to make essentially business judgments). Reasons of practicality and good sense strongly suggest that business decisions be left to businessmen. Whether to pursue litigation is not a judicial decision, rather, it is a business choice. Burks v. Lasker, 441 U.S. 471, 487, 99 S.Ct. 1831, 1842, 60 L.Ed.2d 404 (1979) (Stewart, J., concurring) (“A decision whether or not a corporation will sue an alleged wrongdoer is no different from any other corporate decision____”).
692 F.2d at 898.
What I find even more startling in the examination of Joy is the majority’s failure to mention another opinion, the case also in the Second Circuit but by a different panel, Abramowitz v. Posner, 672 F.2d 1025 (2d Cir.1982). Abramowitz was decided on February 9, 1982, and Joy was decided on November 4, 1982. It appears to me that there is a fundamental contradiction between the two cases, the only difference being that Abramowitz involved Delaware law and, of course, as I have already observed, Joy involved Connecticut law or what the court predicted Connecticut law would be. Both cases relied on Zapata. The only reference to Abramowitz is in the dissenting opinion of Judge Cardamone where he cites a case as one of a number of cases that have followed Auerbach’s teaching that an unbiased board’s power to terminate derivative litigation is essentially unreviewable, observing with regard to both Abramowitz and Galef v. Alexander, 615 F.2d 51 (2d Cir.1980):
Our own Court eschewed second-guessing by the courts of what is the responsibility of a corporate board of directors and, until today, may properly have been included in the above group. Galef v. Alexander, 615 F.2d 51 (2d Cir.1980); Abramowitz, supra.
Joy at 900 n. 3.
That the Abramowitz panel correctly differentiated between the demand cases and the non-demand eases is evidenced by the fact that on the same day Abramowitz was decided the same panel released its decision in Maldonado v. Flynn, 671 F.2d 729 (2d Cir.1982). In Maldonado the same parties were involved who eventually were involved with the Zapata case in the Delaware Supreme Court. In other words, in Maldonado where there was no demand but demand was excused due to futility, the second step of the application of independent business judgment was required.
This brings me to an analysis of the decision in Zapata insofar as it is applicable to the present case. I agree, and I will parse Zapata in more detail subsequently in support of that agreement, with the analysis of Delaware law as exemplified in Zapata given by the Abramowitz court.
In sum, whether and how Delaware law permits disinterested independent directors of a corporation to seek termination of derivative litigation brought to redress alleged impropriety by other directors depends upon the type of case. Where demand upon the corporation has been made and refused, a court will defer to the company’s business judgment to forgo litigation unless the shareholder can show that the directors acted wrongfully. Where demand has not been made due to futility, however, the company bears the initial burden of establishing its good faith and independence in seeking termination, and even then, its judgment is subject to the court’s objective scrutiny.
Abramowitz, 672 F.2d at 1031.
In the case before us, a demand was made on the corporation and was refused. Turning directly to Zapata, the case for *1319decision before that court was one in which no demand had been made. The Delaware Supreme Court in reviewing the law applicable to Delaware corporations summarizes the situation where a demand has been made and refused as follows:
As we noted, the question has been treated by other courts as one of the “business judgment” of the board committee. If a “committee, composed of independent and disinterested directors, conducted a proper review of the matters before it, considered a variety of factors and reached, in good faith, a business judgment that [the] action was not in the best interest of [the corporation]”, the action must be dismissed. See, e.g., Maldonado v. Flynn, supra, 485 F.Supp. at 282, 286. The issues become solely independence, good faith, and reasonable investigation. The ultimate conclusion of the committee, under that view, is not subject to judicial review.
Zapata, 430 A.2d at 787. The court then goes ahead to express the point that this is not an acceptable stopping point because “there is sufficient risk in the realities of a situation like the one presented in this case to justify caution beyond adherence to the theory of business judgment.” Id. (Emphasis added.) The reference to “this case” by necessity refers to the case before the court where demand was not made and the independent directors had had no opportunity to consider the demand. This is made clear by the next sentence which is that the “context here is a suit against directors where demand on the board is excused.” Id. (Emphasis added.) Thereafter, the court proceeded to establish ground rules for the decision in the case before it where a demand had not been made but was excused. That the court was continuing to differentiate the two types of cases is clear from a subsequent extract from the court’s opinion:
Whether the Court of Chancery will be persuaded by the exercise of a committee power resulting in a summary motion for dismissal of a derivative action, where a demand has not been initially made, should rest, in our judgment, in the independent discretion of the Court of Chancery. We thus steer a middle course between those cases which yield to the independent business judgment of a board committee and this case as determined below which would yield to unbridled plaintiff stockholder control.
Id. at 788. (Emphasis added.)1
Perhaps the Delaware court could have made it even clearer that they were differentiating between the two types of cases, but as I read Zapata, the court was saying that it was already firmly established in Delaware law that the business judgment prevailed in the demand case but that in the case in which the stockholders proceeded to file a derivative suit without making a demand first on the corporation to take action that a second step resting in the independent discretion of the judiciary was necessary. If this had been done, the court in Joy and the district court in the present case would not hopefully have pursued the false trail of the second step involving the exercise of the trial judge’s business judgment, a capacity possibly subject to question no matter how learned a particular judge may be in the affairs of the business world. If the district court in the present case handled this case as a demand-refused case, I have little doubt that the court would have found that the procedure adopted by Continental met the test which I regard as being the Delaware test. As the judge himself stated on June 30, 1983: “I believe I would find on the basis of what I heard so far that the committee was independent, that it acted in good faith, and with the exceptions I have noted, it performed an adequate investigation.”
Turning back to the pronouncement from the bench preceding this observation to determine what he regarded as the exceptions to the performance of an adequate investi*1320gation, these apparently relate primarily to Harper who allegedly engaged in an insider’s sale of stock and to Ernst & Whinney. The deficiency on Harper seems at best to be a second-guessing of the committee in what amounts to judicial second-hand determination of credibility. The second deficiency noted by the judge related to Ernst & Whinney as to which the committee had engaged Price Waterhouse as its accounting consultants. The district judge who was to exercise his business judgment stated “I know nothing about Price Water-house other than what I have heard here.” I query whether the judge meant that literally. The remainder of the expressions of the judge leading up to his questioning the adequacy of the investigation relate to what can only be regarded as business policy matters not germane to the adequacy of the investigation.
If the district court, as I think it should have, had terminated the pending derivative suits, it having been established satisfactorily that the committee was composed of independent and disinterested persons who had reached in good faith a business judgment that the action was not in the best interest of the corporation, the matter of the confidentiality of the report would not have been reached as the demands which the media are attempting to get here were only pertinent to the merits of the derivative suits if they had been permitted to proceed. That did not happen, however, because of the position that the district judge took and the appellants were compelled to go forward with more specific details over and above showing enough to establish independence, good faith, and adequacy. I, therefore, would have reversed on the basis that the court should have dismissed the derivative suits and that the records of the committee’s report and supporting documents under the applicable Delaware rule were not properly before the court and were not subject to disclosure.
Even if the confidentiality issue were otherwise reachable at this time, I would disagree with the result that the majority has reached. The report was submitted under seal. The phrase “under seal” would seem to me to be a term of art, a closed door to public dissemination because of the limited status under which they were brought into the proceedings. Gertrude Stein’s memorable rose reference is applicable here. When the appellants found that they were going to have to try in effect, and even though in miniature, the merits of the derivative suits in proceedings which were supposed to be merely to determine whether the derivative suits could be disposed of in a summary proceeding, they quite foreseeably abandoned the proceedings which were going beyond the realm that should have been applicable to them. The reports and accompanying documents still bearing the imprimatur of being sealed should have departed the scene with appellants.
. Since the argument in this case, the Delaware Supreme Court decided Aronson v. Lewis, No. 203, 1983 (Del. March 1, 1984), which reaffirms dle holding in Zapata with respect to the business judgment rule in non-demand cases.