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MONTH-IN-BRIEF (Feb 2019)

 Corporate Law

Delaware Supreme Court Orders Production of Emails in Response to Section 220 Demand

By Christopher Walsh, Gibbons P.C.

In KT4 Partners LLC v. Palantir Technologies Inc., decided on January 29, 2019, the Delaware Supreme Court required a corporation to produce internal emails—in addition to traditional corporate records such as meeting minutes and board resolutions—in response to a shareholder’s “books and records” demand under 8 Del. C. §220 as part of the shareholder’s investigation into potential wrongdoing by the corporation’s management. While cautioning that “§220 inspections are not tantamount to ‘comprehensive discovery’” and are “much less extensive than would likely be produced in discovery under the standards of Rule 26,” the Court held that, under the particular facts presented to it, emails exchanged among the corporation’s management must be produced in response to the §220 request. The facts that helped sway the court included the following: that management had conducted “its corporate business informally over email and other electronic media,” that “the potential wrongdoing appeared to have occurred by email,” and that “there [were] no board-level documents” relating to the areas of the shareholder’s investigation.

Delaware Court of Chancery Denies Section 220 Bid for Lack of a Credible Basis of Corporate Wrongdoing

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