Proof that an inspection demand is improperly “lawyer-driven” will overcome a stockholder’s pretextual claim for investigating wrongdoing. A stockholder does not have a.
For decades, Delaware courts have encouraged stockholders to use the “tools at hand” before initiating lawsuits by obtaining corporations’ books and records through 8 Del. C. § 220.
Gross v. Biogen Inc
., C.A. No. 2020-0096-PAF (Del. Ch. Apr. 14, 2021).
On October 11, 2016, plaintiff Melvin Gross, served the first of four books-and-records demands on defendant Biogen Inc., under DGCL Section 220. Mr. Gross was a stockholder of Biogen at the time he made the demand. The demand sought eight categories of materials in order to: (1) “investigate possible corporate wrongdoing” and mismanagement related to state and federal investigations; and (2) “determine the independence of the Board members.” Biogen rejected the October 2016 demand, contending that it did not meet Section 220’s form and manner requirements, and that Gross lacked a proper purpose to inspect Biogen’s records. Through subsequent books-and-records demands on November 4, 2016, June 21, 2018, and December 3, 2019, Gross attempted to cure the alleged deficiencies, but succeeded only in prompting Biogen to argue that certain of the records sought were neither necessary nor essential to prop