A stockholder seeking the books and records of a Delaware corporation to investigate alleged management misconduct must establish a “credible suspicion.” Even where a stockholder meets that burden, it will only be entitled to documents necessary and essential to accomplish its purpose. Although the Delaware Court of Chancery may order the production of certain electronically stored information, the scope of a books-and-records request is more limited than discovery that may be obtained in a plenary action. The recent case of  Bucks County v. CBS, C.A. No. 2019-0820-JRS (Del. Ch. Nov. 25, 2019), demonstrates that even when the Court of Chancery determines that a stockholder has alleged a credible suspicion of wrongdoing, the court will not require the company to produce documents in response to overly broad requests that seek information that is not essential to the stockholder’s claimed investigatory purpose.

CBS arose out of the Aug. 13 announced merger of CBS Corp. and Viacom, entities both controlled by Shari Redstone. The plaintiff sought books and records on Sept. 27 and asserted that the merger was the product of Redstone’s “unrelenting desire” as the controlling stockholder on both sides of the proposed transaction to merge the two companies. The plaintiff asserted that the process and price of the proposed transaction were unfair.

Court Finds Plaintiff’s Allegations Met Low Bar of ‘Credible Suspicion’

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