United Technologies Corp. v. Treppel, Del. Supr., No. 127, 2014 (Dec. 23, 2014). This Delaware Supreme Court decision reversed a Chancery decision on the issue of whether a company could insist as a prerequisite, prior to producing documents pursuant to DGCL Section 220, that any suits arising from the documents be filed only in a court within the State of Delaware. This is one of several reversals of the Court of Chancery in recent weeks by Delaware’s high court. Such reversals were a rarity in the past, but perhaps with the new Chief Justice, a former Chancellor of the Court of Chancery, as well as a majority of new justices now constituting the Delaware Supreme Court (compared to this time last year), we may continue to see more reversals than in the past?
The high court’s reasoning behind this latest reversal is that DGCL Section 220 gives the Court of Chancery authority to impose conditions on the production of books and records, and thus concluded that it was error for the trial court to hold that it lacked the authority to impose the requested forum restrictions. The Supreme Court remanded so that Chancery could consider whether, in its discretion, it should impose the requested restrictions based on the facts of this particular case.
An added bonus is the court’s discussion of the fact that it found relevant that the company adopted a forum selection bylaw after this Section 220 suit was filed, and the court rejected the argument that the bylaw was not binding because it was adopted after the plaintiff bought his stock. See footnotes 39 to 41 and accompanying text.