Section 220 of the DGCL enables a stockholder to obtain limited corporate information if they can state a proper purpose. Although in theory straightforward, Section 220 has spawned a “sprawling … jurisprudence” as stockholders test the breadth of their demands and correspondingly, corporations test the bounds of their defenses. See Wilkinson v. A. Schulman, C.A. No. 2017-0138-VCL, slip op. at 3 (Del. Ch. Nov. 13, 2017). Recently, Gross v. Biogen, C.A. No. 2020-0096-PAF (Del. Ch. Apr. 14, 2021) presented the Delaware Court of Chancery with the question of how heavily may a stockholder rely upon counsel in seeking corporate books and records under Section 220?

Background

Gross, a stockholder, read a newspaper article indicating that Biogen had been implicated in an alleged Medicare kickback scheme, and Gross sought advice of counsel. Through counsel, Gross issued several demands to inspect Biogen’s books and records. Each time, Biogen rejected inspection. In his ultimate request, Gross sought to investigate possible breaches of fiduciary duty related to the alleged kickback scheme and to investigate the board’s independence relating to the scheme.

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