Books and Records – Delaware Docket

Chancery Court Finds That Stockholders May Rely on Allegations Forming the Basis of Other Lawsuits to Demand Inspection of Books And Records Pursuant to Section 220 of the DGCL

Jul 29 2021

In Deborah Pettry, et al. v. Gilead Sciences, Inc., C.A. No. 2020-0132-KSJM (Del. Ch. Nov. 24, 2020), the Court of Chancery found that plaintiffs may rely on allegations forming the basis of other lawsuits to meet the credible basis standard for demands to inspect books and records under Section 220 of the DGCL. Further, the Court granted plaintiffs leave to move for attorneys’ fees and expenses as a result of Gilead Sciences, Inc.’s (“Gilead”) “overly aggressive defense” at the Section 220 phase, pointing to Gilead’s pre-litigation and litigation-related conduct as a potential basis for awarding fees.

Produce those documents; Conflict allegations sufficient to merit inspection of books and records under Section 220 of the DGCL.

Jun 26 2021

By: Joanna A. Diakos and Kara Maynard Guio

In Alexandria Venture Inv. LLC et al. v. Verseau Therapeutics, Inc., C.A. No. 2020-0593-PAF (Del. Ch. Dec. 18, 2020), the Delaware Court of Chancery (the “Court”) granted plaintiff stockholder’s motion seeking to compel inspection of certain books and records of Verseau Therapeutics pursuant to Section 220 of the Delaware General Corporation Law (“DGCL”). The Court ruled that the stockholders met the low threshold necessary to establish a credible basis for believing that corporate wrongdoing had occurred. While disagreements with management decisions are insufficient to meet this burden, evidence of a conflict of interest in making management decisions is sufficient.

Delaware Court of Chancery Finds Valuation of Stock Alone is Sufficient to Support Books and Records Request

Oct 20 2020

By: Joanna A. Diakos Kordalis and Serena Hamann

In Avery L. Woods Trust v. Sahara Enterprises, Inc., C.A. No. 2020-0153-JTL (Del. Ch. July 22, 2020), the Delaware Court of Chancery (the “Court”) granted an inspection of books and records to Avery L. Woods (“Woods”), the trustee of the Avery L. Woods Trust (the “Trust” ) finding that the Trust’s stock valuation and investigation of possible mismanagement reasons for inspection sufficient and proper.

Chancery Court Denies Assignor’s Inspection Demand under Real Party in Interest Rule, Prohibits Substitute Plaintiff

Aug 26 2020

By: Scott E. Waxman and Michael C. Payant

In SolarReserve CSP Holdings, LLC v. Tonopah Solar Energy, LLC, C.A. No 2020-0064-JRS (Del. Ch. July 24, 2020), the Delaware Court of Chancery (the “Court”) examined an alleged breach of contract based on the denial of inspection rights to which SolarReserve CSP Holdings, LLC (“SR”) was allegedly entitled under the LLC Agreement (the “LLCA”) of Tonopah Solar Energy, LLC (the “Company”). The Court entered judgment for the Company, finding (i) SR was not a real party in interest under Chancery Court Rule 17 because it had made a complete assignment of its rights under the LLCA, and (ii) the real party in interest assignee was not entitled to inspection rights under the LLCA.

COURT OF CHANCERY ANALYZES BOOKS AND RECORDS CLAIM UNDER THE LLC ACT

Jul 09 2020

By: Scott Waxman and Zack Sager

In Riker v. Teucrium Trading, LLC, the Delaware Court of Chancery granted in part and denied in part a member’s demand for books and records under Section 18-305 of the Delaware Limited Liability Company Act (the “LLC Act”). The Court also denied the member’s request for attorneys’ fees.

Plaintiff Entitled to Inspect Additional Documents Where Proper Purpose Demonstrated as to Mismanagement and Wrongdoing

May 14 2020

By: Joanna Diakos Kordalis and Pouya Ahmadi

In Paraflon Investments Ltd. v. Linkable Networks, Inc., C.A. No. 2017-0611-JRS (Del. Ch. April 3, 2020), the Delaware Court of Chancery (the “Court”) granted, in part, stockholder Paraflon Investments, Ltd.’s (“Paraflon”) request, after a trial on a paper record, for corporate books and records pursuant to Section 220 of the DGCL where proper purpose was shown with respect to the desire to investigate mismanagement and wrongdoing.

Request for Attorneys’ Fees Denied Under Corporate Benefit Doctrine

Mar 16 2020

By: Annette Becker and Zack Sager

In Martin v. Harbor Diversified, Inc., the Delaware Court of Chancery denied the plaintiff’s request for attorneys’ fees under the corporate benefit doctrine because the corporate benefit produced by the litigation was “a mere externality” to the plaintiff’s ultimate, personal goal of achieving a buyout of his interest in the corporation.

Delaware Court of Chancery Grants Stockholder’s Section 220 Demand for Books and Records

Jan 10 2020

By Annette E. Becker and Frank J. Mazzucco

In Michael Donnelly v. Keryx Biopharmaceuticals, Inc., C.A. No. 2018-0892-SG (Del. Ch. Oct. 24, 2019), the Delaware Court of Chancery granted a plaintiff stockholder’s demand for a company’s books and records under Section 220 of the Delaware General Corporation Law in connection with a proposed merger.

Delaware Court of Chancery Grants Stockholder’s Post-Merger Request to Review Company’s Books and Records under DGCL § 220

Nov 20 2019

By Scott E. Waxman and Frank J. Mazzucco

In Kosinski v. GGP Inc., C.A. No. 2018-0540-KSJM (Del. Ch. Aug. 28, 2019), the Delaware Court of Chancery (the “Court”) granted a stockholder’s request, following a merger, to review a company’s books and records under Section 220 of the Delaware General Corporation Law (“DGCL”).

Delaware Court of Chancery Allows Stockholder to Inspect Books and Records Over Defendant Corporation’s Objections

Oct 07 2019

By Scott Waxman and Serena Hamann

In Senetas Corporation, Ltd. v. DeepRadiology Corporation, C.A. No. 2019-0170-PWG (Del. Ch. July 30, 2019), the Delaware Court of Chancery allowed a stockholder’s books and records inspection despite objections raised by the defendant corporation because the stockholder established a proper purpose for the inspection by proving a credible basis from which the Court could infer mismanagement or wrongdoing may have occurred and because the defendant failed to prove the plaintiff’s stated purpose was offered under false pretenses.

Catagory:Books and Records