Michael O'Neill v. Summit Materials, Inc.

Summary

The Delaware Court of Chancery denied Michael O’Neill’s exceptions to a Magistrate in Chancery’s final report denying his demand to inspect Summit Materials’ books and records under 8 Del. C. § 220. The court held that O’Neill lacked a proper purpose because he had previously filed a plenary action challenging the same alleged wrongdoing, and his subsequent dismissal of that action did not create a special circumstance warranting inspection. The court adopted the Magistrate’s final report after de novo review.

Holdings

1. A stockholder generally lacks a proper purpose to use Section 220 to investigate alleged wrongdoing that the stockholder has already placed at issue in a plenary action, because filing the plenary action demonstrates that the stockholder considered the information already available sufficient to pursue the claims.
2. AmerisourceBergen did not overrule the established rule that filing a plenary lawsuit concerning the same alleged misconduct can defeat the stockholder's proper purpose for seeking Section 220 inspection.
3. The facts did not justify an exception to the general rule. A voluntary dismissal undertaken for strategic reasons, without judicial leave to amend or a judicial finding that further factual development was needed, does not create the special circumstances recognized in prior cases.

Questions Presented

1. Whether a stockholder who has filed a plenary action challenging the same alleged wrongdoing may establish a proper purpose to inspect books and records under 8 Del. C. § 220.
2. Whether AmerisourceBergen Corp. v. Lebanon County Employees' Retirement Fund overruled or displaced Delaware precedent concerning the effect of filing a plenary action on a later Section 220 demand.
3. Whether the circumstances surrounding the plaintiff's dismissed plenary action, pending statutory amendments, and the parties' standing agreement justified an exception to the general rule against pursuing parallel plenary and Section 220 actions.

Disposition

other