June 01, 2016

Section 220: Return to First Principles as a Defense Against Nuisance Demands

Rachel E. Horn and Arun J. Mohan

Since the Delaware Supreme Court’s 2014 Wal-Mart decision (in which the Supreme Court required production of documents held by its executives and permitted stockholders to invade Wal-Mart’s attorney client privilege and work product protections based on “substantial need”), the frequency of Section 220 litigation has increased as stockholders of Delaware corporations, emboldened by the unprecedented level of access afforded in Wal-Mart, appear to be using the tools at hand more aggressively to dig up information about potential corporate malfeasance. Dovetailing with its work to define the limits of disclosure-only settlements, the Court of Chancery has sought to prevent Section 220 litigation from becoming the next form of strike suit.

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