A recent decision of the Delaware Supreme Court affirmed a ruling of the Court of Chancery which rejected a claim under DGCL section 220 for books and records related to the aborted “inversion” merger of Abbvie, Inc. By Order dated Jan. 20, 2016, in Southeastern Pennsylvania Transportation Authority v. Abbvie, Inc., Del. Supr., No. 239, 2015 (Del. Jan. 20, 2016), a majority of the en banc court explained that the stockholder did not present a credible basis of a claim for money damages that were not exculpated by the immunizing provisions of DGCL section 102(b)(7). Two members of the high court disagreed with the majority. Delaware’s high court historically has featured few dissenting opinions, but rarer still is a split in an Order of the court. A prelude to the oral argument in the case was provided on these pages earlier.
Delaware courts often instruct practitioners representing stockholders to use DGCL section 220 as one of the “tools at hand” to obtain books and records from a company prior to filing a plenary action. This decision is an example of why it is not always a simple exercise to use Section 220. Rather, as a “tool”, Section 220 in my experience can be more akin to a blunt instrument as compared to a precise implement.