The “race to the courthouse” may be back on in Delaware, after a pair of recent Chancery Court opinions cast doubt on the efficacy of fully litigating a Section 220 action when first-filers in other jurisdictions opt to push derivative claims without first conducting a books-and-records investigation.
In both cases, Delaware derivative suits were barred by preclusion because of prior dismissals of derivative cases involving similar claims. The plaintiffs in Delaware, in each instance, had conducted books and records pursuant to Section 220 of the Delaware General Corporation Law, while the so-called fast-filers—in Arkansas and New York—did not.
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