IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

DEBORAH PETTRY and GAIL 

FRIEDT,

Plaintiffs,

v.

GILEAD SCIENCES, INC.,

Defendant.

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C.A. No. 2020-0132-KSJM

RICHARD C. COLLINS,

Plaintiff,

v.

GILEAD SCIENCES, INC., 

Defendant. 

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C.A. No. 2020-0138-KSJM

HOLLYWOOD POLICE OFFICERS’ 

RETIREMENT SYSTEM,

Plaintiff,

v.

GILEAD SCIENCES, INC.,

Defendant. 

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C.A. No. 2020-0155-KSJM
ANTHONY RAMIREZ,

Plaintiff,

v.

GILEAD SCIENCES, INC.,

Defendant.

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C.A. No. 2020-0173-KSJM

MEMORANDUM OPINION

Date Submitted: August 26, 2020

Date Decided: November 24, 2020

Blake A. Bennett, COOCH AND TAYLOR, P.A., Wilmington, Delaware; Brian J. 

Robbins, Stephen J. Oddo, Eric M. Carrino, ROBBINS LLP, San Diego, California; 

Counsel for Plaintiffs Deborah Pettry and Gail Friedt.

Kurt M. Heyman, Gillian L. Andrews, HEYMAN, ENERIO, GATTUSO & HIRZEL 

LLP, Wilmington, Delaware; Gustavo F. Bruckner, Daryoush Behbood, POMERANTZ 

LLP, New York, New York; Counsel for Plaintiff Richard C. Collins.

Gregory V. Varallo, BERNSTEIN, LITOWITZ, BERGER & GROSSMANN LLP, 

Wilmington, Delaware; David Wales, Alla Zayenchik, BERNSTEIN, LITOWITZ,

BERGER & GROSSMANN LLP, New York, New York; Robert D. Klausner, 

KLAUSNER, KAUFMAN, JENSEN, & LEVINSON; Counsel for Plaintiff Hollywood 

Police Officers’ Retirement System.

Gregory V. Varallo, BERNSTEIN, LITOWITZ, BERGER & GROSSMANN LLP, 

Wilmington, Delaware; Francis A. Bottini, Jr., Anne B. Beste, BOTTINI & BOTTINI, 

INC., La Jolla, California; Mark C. Molumphy, Tyson C. Redenbarger, Noorjahan 

Rahman, COTCHETT, PITRE & MCCARTHY, LLP; Counsel for Plaintiff Anthony 

Ramirez.

Brian C. Ralston, Aaron R. Sims, David M. Hahn, POTTER, ANDERSON & 

CORROON LLP, Wilmington, Delaware; John C. Dwyer, Shannon M. Eagan, Tijana 

Brien, Christopher Vail, COOLEY LLP, Palo Alto, California; Counsel for Defendant 

Gilead Sciences, Inc.

McCORMICK, V.C.
Each of the five stockholder plaintiffs seeks to inspect books and records of Gilead 

Sciences, Inc. (“Gilead” or the “Company”). The stated purpose of their respective 

inspections is to investigate possible wrongdoing in connection with the Company’s 

development, marketing, and sale of HIV drugs.

1

 When a stockholder seeks inspection 

for the purpose of investigating wrongdoing, the stockholder must demonstrate a credible 

basis to suspect possible wrongdoing. 

To demonstrate a credible basis, the complaint tells a story as replete with inequity

as the biblical verse that the Company’s namesake brings to mind.2

 In 2001, Gilead 

received FDA approval for tenofovir disoproxil fumarate (“TDF”), a life-saving

medication for persons living with HIV. TDF has generated billions in revenue for 

Gilead year after year. These revenues incentivized Gilead to protect the market for TDF

by forestalling the market entry of generic TDF and delaying the development of 

Gilead’s safer TDF-substitute drug called tenofovir alafenamide (“TAF”). The plaintiffs 

say that there is a credible basis to suspect that Gilead violated antitrust laws, committed 

mass torts, infringed on government patents, and defrauded government programs in its 

efforts to protect the TDF market.

In stating their credible basis, the plaintiffs join in chorus with a host of other

accusers. Gilead’s activities have drawn lawsuits and investigations from persons living 

 1 There are two forms of HIV, HIV-1 and HIV-2, and both can develop into the most 

severe phase of HIV infection, AIDS. While acknowledging that these are extremely 

important distinctions, this decision describes Gilead’s products as “HIV” drugs or 

treatments to avoid overcomplicating an already complex set of facts.

2 See, e.g., Hosea 6:8.
2

with HIV, activists, regulatory agencies, the Department of Justice, and Congress. As 

just one example, in 2019, activists and union benefit funds filed a class action complaint 

in federal court alleging that Gilead and its competitors violated federal and state antitrust 

laws by engaging in anticompetitive conduct to prevent competition in the market for 

TDF-based drugs. The plaintiffs in that case seek billions of dollars in damages. In 

March 2020, the federal court partially denied a motion to dismiss, allowing portions of 

the case to move forward.

The credible basis standard is widely described as the “lowest possible burden of 

proof” under Delaware law,3 and Gilead does not meaningfully attack the plaintiffs’ 

credible basis. Gilead half-heartedly argues that the plaintiffs’ credible basis is merely an 

echo of unsubstantiated allegations made in other lawsuits and should be given no 

credence. But Gilead does not explain why a credible basis analysis should ignore 

allegations forming the basis of other lawsuits, and there is no principled ground for

categorically disregarding such information.

Gilead’s main strategy is to launch a number of peripheral attacks designed to chip 

away at the plaintiffs’ proper purposes. Gilead asserts a defense based on Wilkinson v. A. 

Schuman, Inc., in which this court denied inspection where the defendant proved that the 

plaintiff was a passive conduit in a purely lawyer-driven inspection effort.

4

 As multiple

subsequent decisions of this court have made clear, Wilkinson involved extreme facts, 

 3 See, e.g., Seinfeld v. Verizon Comm’ns, Inc., 909 A.2d 117, 123 (Del. 2006).

4 See 2017 WL 5289553, at *3–4 (Del. Ch. Nov. 13, 2017). 
3

and Gilead’s argument that five separate plaintiffs represented by four separate sets of 

counsel committed the same blunders found in Wilkinson borders on absurd. A

corporation is entitled to assert defenses in a Section 220 action and probe the bona fides 

of a plaintiff’s stated purpose. In this case, however, Gilead’s pursuit of the Wilkinson

defense raises more questions about Gilead’s purposes than the plaintiffs’.

Gilead asserts myriad other defenses, arguing that the plaintiffs should be denied 

inspection because any follow-on derivative claims they might pursue would not pass the 

pleading stage. Gilead peddles these points as “standing” arguments, presumably 

because this court recently rejected a series of nearly identical points when framed as 

“proper purpose” deficiencies.

5

 This semantic sleight of hand is unsuccessful, and

Gilead’s so-called “standing” arguments fare no better.

As a fallback, Gilead makes a series of arguments concerning the scope of 

inspection, contending that inspection should be limited to formal board materials. This 

decision rejects those arguments because multiple other categories of documents are 

necessary and essential to the plaintiffs’ stated purposes.

Regrettably, Gilead’s overly aggressive defense strategy epitomizes a trend. As 

described recently by a group of scholars, defendants are increasingly treating Section 

220 actions as “surrogate proceeding[s] to litigate the possible merits of the suit” and 

“place obstacles in the plaintiffs’ way to obstruct them from employing it as a quick and 

 5 See Lebanon Cnty. Emps. Ret. Fund v. AmerisourceBergen Corp., 2020 WL 132752, 

at *6–24 (Del. Ch. Jan. 13, 2020).
4

easy pre-filing discovery tool.”6 Defendants like Gilead adopt this strategy with the 

apparent belief that there is no real downside to doing so, ignoring that this court has the 

power to shift fees as a tool to deter abusive litigation tactics. Gilead’s approach might 

call for fee shifting in this case, and the plaintiffs are granted leave to move for their

expenses, including attorneys’ fees, incurred in connection with their efforts to obtain 

books and records.

I. FACTUAL BACKGROUND

The facts are drawn from the factual stipulations in the parties’ pre-trial order, the 

testimony of each plaintiff (all by deposition and one also at trial), and the 262 joint trial 

exhibits submitted by the parties.7

A. Gilead’s HIV Treatments

For more than a decade, Gilead has been a leader in the discovery, development, 

and commercialization of antiretroviral therapy for HIV.

8

 Some estimate that Gilead 

controls approximately 75% of the HIV drug market.9

 Millions of people depend on 

 6 James D. Cox et al., The Paradox of Delaware’s “Tools at Hand” Doctrine: An 

Empirical Investigation, 75 Bus. Law. 2123, 2150 (2020).

7 Unless otherwise noted, pleadings are cited by reference to items docketed in C.A. No. 

2020-0173-KSJM (“Dkt.”). Factual citations are to: the Amended Pre-Trial Stipulation 

and Order, Dkt. 101 (“PTO”); Transcripts of Depositions of Richard C. Collins, Gail 

Friedt, Deborah Pettry, Anthony E. Ramirez, and Hollywood’s Rule 30(b)(6) 

Representative, David M. Williams, Dkt. 82 (cited using the deponent’s last name and 

“Dep. Tr.”); the Trial Transcript, Dkt. 97 (“Trial Tr.”); and Joint Trial Exhibits (cited by 

“JX” number).

8 JX-213.

9 See, e.g., JX-250 at 2.
5

Gilead’s HIV treatments for their survival.10 The corollary is that Gilead depends on the 

sale of HIV treatments for much of its financial survival. In 2019, for example, the sale 

of HIV treatments produced more than $16.4 billion in revenue or 73% of its top-line.

11

A brief history of the development and commercialization of Gilead’s HIV 

treatments lays the backdrop for this lawsuit. Gilead received Food and Drug 

Administration (“FDA”) approval for its ground-breaking HIV treatment—TDF—in 

2001.12 Initially sold commercially as Viread, TDF was a significant improvement over 

other drugs.13 After TDF was approved, Gilead shifted its efforts toward reducing the 

number of pills a persons infected with HIV would take daily. Gilead developed a 

combined formulation of TDF and a drug called emtricitabine that could be administered

as a fixed-dose, once-daily tablet.14 The result, Truvada, was approved as an HIV 

treatment in 2004.15 Truvada was later approved for use by high-risk, uninfected adults

as part of an HIV-preventative strategy called pre-exposure prophylaxis (“PrEP”).16 In 

addition to Viread and Truvada, the FDA approved three of Gilead’s other TDF-based 

HIV treatments: Atripla in 2006, Complera in 2011, and Stribild in 2012.17

 10 See JX-213.

11 See JX-135 at 34.

12 JX-77 at 3. 

13 See id.

14 Id. at 4.

15 JX-3 at 1.

16 JX-26 at 1.

17 JX-27 at 1.
6

TDF poses safety risks for the patients’ kidneys and bones.18 In 2007, Gilead 

scientists published an article discussing TDF safety issues, which identified the most 

common adverse events as including renal failure, Fanconi syndrome, and serum 

creatinine increase.

19 In 2007, Gilead updated its labeling to recognize that TDFassociated renal damage also causes bone softening in patients.20 A high dose of TDF is 

typically required to achieve the desired therapeutic effect.

21 The higher the dose of 

TDF, the greater are its toxic effects.22 

Before the FDA approved Gilead’s first TDF-based drug in 2001, Gilead had 

discovered another way of administering tenofovir—TAF.

23 TDF and TAF both deliver 

tenofovir to the target blood cells, but TAF delivers tenofovir more efficiently, which 

allows for a dose of less than one-tenth that of TDF.

24 The lower dosage in turn reduces 

toxicity levels and makes TAF safer than TDF.25 Gilead highlighted the benefits of TAFbased drugs over its TDF-based drugs in a 2001 10-K,26 and Gilead continued testing 

 18 JX-244 ¶ 215.

19 JX-68 ¶ 221.

20 Id. ¶ 224.

21 Id. ¶ 212.

22 Id. 

23 Id. ¶ 194.

24 JX-68 ¶ 195; JX-41 at 1–2.

25 See id.

26 JX-68 ¶ 243 (citing Gilead Sciences, Inc., Form 10-K 13, 

https://www.sec.gov/Archives/edgar/data/882095/000091205702011690/a2073842z10-

k.htm).
7

TAF through 2004, frequently touting positive results from clinical studies on the 

market.27

Despite its safety benefits, Gilead shelved the development of TAF-based drugs in

October 2004, attributing the decision to patients’ increasing use of TDF-based Viread 

and the FDA approval of TDF-based Truvada, among other things.28

Gilead did not renew development of TAF-based drugs until 2010, six years after 

it shelved the project.29 Gilead did not submit a new drug application for a TAF-based 

drug until November 2014.30 When rolling out its TAF products, Gilead repeatedly 

marketed TAF as a safer replacement for TDF.31 

 27 Id. ¶¶ 244–48.

28 Id. ¶ 249 (quoting Press Release, Gilead, Gilead Discontinues Development of GS 9005 

and GS 7340; Company Continues Commitment to Research Efforts in HIV (Oct. 21, 2004), 

https://www.gilead.com/news/press-releases/2004/10/gilead-discontinues-developmentof-gs-9005-and-gs-7340-company-continues-commitment-to-research-efforts-in-hiv).

29 Id. ¶ 255.

30 JX-35 at 1.

31 See, e.g., JX-40 (describing TAF as a product for patients who wanted to “replace their 

current antiretroviral treatment regimen” and touting the “safety and efficacy” of TAF, 

despite acknowledging that “TAF-based regimens are investigational products and have 

not been determined to be safe or efficacious”); JX-42 at 2 (Gilead’s then-EVP of 

Commercial Operations, Paul Carter, stating that “[Genvoya] has been launched in the 

context of HIV patient around the world who are getting older and older. And the 

average age in the US now is actually over 50 years, for an HIV patient. And HIV in 

itself causes renal issues and can have impact on bone density. And so, I think everyone 

is very happy to see that we now have a new generation of HIV single-tablet regimens 

which have a much better safety profile and tolerability and can be used for many, many 

years.”); id. (stating that Genvoya would replace Truvada as the “backbone” component 

of the combination therapies); JX-58 at 2 (Gilead’s President and CEO, John Milligan, 

stating that he hopes TAF will be the “safest gentlest, yet most powerful option” 

available to HIV patients). 
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Gilead expanded its TAF franchise through 2015, submitting new drug 

applications for a fixed-dose combination of emtricitabine and TAF and a single-tablet

TAF regimen in April and July 2015, respectively.32 The FDA approved Gilead’s TAFbased treatment, Genvoya, in November 2015.33 Within two weeks of Genvoya’s 

approval, TAF became listed as a preferred treatment option under the U.S. Department 

of Health and Human Services guidelines.34 Gilead later received approval for the TAFbased drugs Odefsey, Descovy, and Biktarvy.

35

B. Criticisms of Gilead’s Development and Commercialization of HIV 

Treatments

Gilead’s development and commercialization of its HIV treatments has drawn 

extensive criticism from persons living with HIV, regulatory agencies, HIV activists, the

Department of Justice (the “DOJ”), and Congress. Gilead has faced antitrust lawsuits, 

mass tort claims, patent infringement litigation, and False Claims Act investigations.

1. Anticompetitive Activities

Gilead is accused of delaying the launch of generic versions of its TDF-based HIV 

treatments by entering into anticompetitive licensing agreements with several branded 

 32 See JX-39 (fixed-dose combination TAF); JX-40 (single-tablet TAF regimen).

33 JX-41 at 1.

34 See JX-42 at 2 (noting that becoming listed that quickly as a preferred treatment option 

was “unprecedented”).

35 See JX-47 at 1 (Odefsey); JX-49 at 1 (Descovy); JX-64 at 1 (Biktarvy); see also JX-90 

at 1 (press release announcing approval of Descovy for PrEP use). Gilead also received 

approval for certain TAF-based drugs used to treat Hepatitis B. In January 2016, Gilead 

submitted an application for TAF to treat chronic Hepatitis B. JX-45 at 1. In November 

2016, the FDA approved Vemlidy, a TAF-based regimen, for the treatment of chronic 

Hepatitis B. JX-55 at 1. 
9

drug manufacturers and collusive settlement agreements with generic drug 

manufacturers.

36 

Gilead is regulated by multiple agencies, including the FDA.

37 After a new drug 

is approved, federal law provides certain exclusivity benefits to pharmaceutical 

companies, such as a five-year new chemical exclusivity.

38 After four years of 

exclusivity, a generic manufacturer can file an Abbreviated New Drug Application

(“ANDA”) showing, among other things, that the generic drug contains the same active 

ingredients as the branded drug and does not infringe on the branded drug’s patent.

39 If 

the branded drug manufacturer brings a claim against the generic drug manufacturer for 

patent infringement within the first 45 days after the filing of the ANDA, then the FDA 

stays the ANDA until the earlier of (a) the passage of 30 months running from date that 

exclusivity ends, or (b) the issuance of a decision holding that the patent is invalid or 

there was no infringement.

40 Thus, seven and a half years is usually the longest that a

new chemical exclusivity period will run.

 36 See JX-244.

37 JX-135 at 20 (“Our operations depend on compliance with complex FDA and 

comparable international regulations. Failure to obtain broad approvals on a timely basis 

or to maintain compliance could delay or halt commercialization of our products.”).

38 JX-244 at ¶¶ 88–91 (citing 21 U.S.C. §§ 355(j)(5)(F)(ii), 355(c)(3)(E)(ii); 21 C.F.R. 

§ 314.108(b)(2)). During this period, no other drug using that chemical as an active 

ingredient can obtain FDA approval.

39 Id. ¶¶ 73–76 (citing 21 U.S.C. § 355(j)(8)(B)). 

40 See id. ¶¶ 78, 88–91, 280 (citing 21 U.S.C. § 355; 21 C.F.R. § 314.108(b)(2)).
10

Generally, the introduction of a generic drug on the market causes price declines 

and sales erosion of branded drugs.

41 Branded drug manufacturers therefore have 

incentives to restrict and impede generics from entering the market.

Between 2004 and 2011, Gilead entered into a number of agreements with 

branded drug manufacturers, including Bristol-Myers Squibb Company (“BristolMyers”), Japan Tobacco, Inc. (“Japan Tobacco”), and Janssen R&D Ireland (“Janssen”),

to create combination therapies that have multiple active ingredients or to license certain 

compounds for exclusive commercialization.

42 The agreements allegedly included “No-

 41 A Federal Trade Commission study found that, on average, within one year of generic 

entry into the market, generics capture 90% of sales and prices decrease 85%. Id. ¶ 93 

(citing FTC, Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions at 8 

(January 2010), https://www.ftc.gov/sites/default/files/documents/reports/pay-delay-howdrug-company-pay-offs-cost-consumers-billions-federal-trade-commission-staffstudy/100112payfordelayrpt.pdf). Gilead has recognized the potential for sales erosion in its 

public filings. See, e.g., JX-135 at 12 (“[A]s new branded or generic products are introduced 

into major markets, our ability to maintain pricing and market share may be affected.”).

42 In December 2004, Gilead and Bristol-Myers formed a joint venture to develop and 

commercialize a once-daily, fixed-dose combination HIV treatment regimen later named 

Atripla. See JX-6 at 1; JX-74 ¶¶ 114–18. In March 2005, Gilead and Japan Tobacco 

entered into a licensing agreement that gave Gilead the exclusive right to develop and 

commercialize a novel HIV integrase inhibitor in all countries except Japan. JX-7 at 1. 

In July 2009 and June 2011, Gilead entered into licensing agreements with Janssen to 

develop and commercialize once-daily fixed-dose combination antiretroviral products. 

See JX-12 at 1 (press release announcing 2009 licensing agreement); JX-21 at 1 (press 

release announcing 2011 licensing agreement). (Janssen was formerly known as 

“Tibotec Pharmaceuticals.” See, e.g., JX-12; JX-21.) In December 2014, Gilead 

expanded its agreements with Janssen to allow for the development and 

commercialization of a new once-daily, single tablet regiment containing Gilead’s TAF 

and emtricitabine, and Janssen’s rilpivirine. JX-36 at 1. The agreement provided that the 

new product would be distributed by Janssen in “approximately 17 markets” and by 

Gilead in all other markets. Id. In October 2011, Gilead entered into a licensing 

agreement with BMS to develop and commercialize a fixed-dose combination of BMS’s 

REYATAZ and Gilead’s cobicistat—later named Evotaz. See JX-24 at 1; JX-242 at 23.
11

Generics Restraints” barring the creation of competing versions of the combination 

therapies that use generic TDF.43 

In 2013, Gilead entered into a settlement agreement with the largest generic 

manufacturer in the world, Teva Pharmaceutical Industries Ltd. (“Teva”).44 Under the 

terms of the settlement, Teva would be prevented from launching a generic version of 

Truvada until December 2017.45 The settlement also reduced the incentives for ANDA 

second-filers to enter the market before December 2017 because the settlement allowed 

Teva to enter the market should a second-filer gain market entry.

46

In 2017, a group of prominent HIV activists, including Peter Staley, implored the 

New York attorney general to investigate the Teva settlement and other agreements with 

generic drug manufacturers concerning the generic production of Truvada.47 The 

 43 JX-74 ¶¶ 89–112.

44 See JX-29. In 2008, Teva submitted an ANDA requesting permission to manufacture 

and commercialize a generic version of Truvada. JX-10. Teva alleged that two of the 

patents associated with Truvada were invalid, unenforceable, or would not be infringed 

by Teva’s manufacture of the product described in its ANDA. Id. If Gilead agreed, then 

Teva could begin producing its generic product immediately. If Gilead sued for patent 

infringement within 45 days, however, Teva would be unable to produce its generic 

product until the earlier of 30 months or a district court decision that is adverse to Gilead. 

Id. Gilead sued Teva for patent infringement less than 45 days after Teva submitted its 

ANDA. See JX-11. In 2012, Lupin Limited (“Lupin”) and Cipla Ltd. (“Cipla”) both 

submitted an ANDA to manufacture and commercialize generic versions of Truvada and 

Viread, respectively. JX-32 at 23. Gilead filed patent infringement lawsuits in response 

to those ANDA submissions as well. Id.

45 See JX-29.

46 See JX-74 ¶¶ 321–55.

47 JX-59; JX-60.
12

activists accused Gilead of paying generic drug manufacturers to delay launching 

generics.48

In May 2019, Staley and others filed a thirteen count class action complaint 

against Gilead and other companies in the United States District Court for the Northern 

District of California (the “Staley Action”).

49 The complaint alleges that Gilead and 

other branded drug manufacturers violated federal and state antitrust laws by engaging in 

anticompetitive conduct in the market for Gilead’s TDF-based drugs.50 Several 

additional class action lawsuits followed, and they were subsequently consolidated into

the Staley Action.

51

The plaintiffs in the Staley Action seek billions of dollars in damages on behalf of 

a class of persons who purchased or reimbursed purchasers of HIV treatments sold by 

 48 JX-59; JX-60.

49 JX-74. On the same day that the Staley Action was filed, the House Committee on 

Oversight and Reform announced that it would hold a hearing to examine Gilead’s 

pricing of Truvada. See JX-75. Gilead Chairman and CEO Daniel O’Day testified at the 

hearing on May 16, 2019. See JX-77. After discussing Gilead’s contribution to the 

development of Truvada and related patents for PrEP, O’Day testified: “We priced 

Truvada, when it was originally approved, based on the price of its two component drugs, 

without adding a premium. We have increased its list price over the years at a rate 

consistent with average price increases in the industry.” JX-77, at 2, 7–8. An expert later 

testified that “Gilead insisted on valuing drug shipments based on the commercial price 

in the United States, rather than the cost of manufacturing, which was at least 300 times 

less. . . . PrEP [treatments] can be manufactured and distributed, including a profit, for 

about $6 per person per month. Gilead charges more than $2100 per person per month, a 

35000% markup.” JX-76 at 3, 2–5. On June 26, 2019, the committee sent Gilead 

requests for documents and information regarding its pricing of Truvada. JX-81.

50 JX-74.

51 See JX-255.
13

Gilead and the other defendants.

52 On March 3, 2020, the United States District Court 

(the “District Court”) in the Staley Action granted in part and denied in part Gilead’s 

motion to dismiss, and granted leave to amend certain of the claims that were 

dismissed.53 

In relevant part, the District Court dismissed with leave to amend the claims that 

there was an overarching conspiracy among Gilead, Bristol-Myers, Japan Tobacco, and 

Janssen.54 The court dismissed with prejudice the claims based on the Gilead/Japan 

Tobacco licensing agreement because the plaintiffs did not plead any specific allegations 

that “the exclusive license would be used in an anticompetitive way.”55

The District Court denied the motion to dismiss as to claims based on: the NoGenerics Restraints in the Gilead/Bristol-Myers and Gilead/Janssen agreements; the Teva 

settlement agreement; and Gilead’s commercialization of TAF.56 As to the 

Gilead/Bristol-Myers and Gilead/Janssen agreements, the court found that a question of 

fact existed as to whether the No-Generics Restraints had sufficient anticompetitive effect 

to constitute an antitrust violation.57 As to the Teva settlement agreement, the court cited

 52 See JX-74 ¶ 429; see also PTO ¶ 4 (“If plaintiffs are successful in their claims, [Gilead] 

could be required to pay significant monetary damages or could be subject to permanent 

injunctive relief.”).

53 JX-242 at 85–87.

54 Id. at 15–16.

55 Id. at 32, 31–33.

56 Id. at 85–86.

57 Id. at 26.
14

several “yellow flag[s]” that could give rise to a finding of anticompetitive conduct.58 As 

to Gilead’s delayed commercialization of TAF, the District Court found that the plaintiffs 

have “a plausible argument that there is no procompetitive justification for” it.59

In January 2020, a group of healthcare insurers filed a class action against Gilead 

and other companies in a Florida federal court, asserting claims substantially similar to 

those in the Staley Action.60

2. Mass Torts

Gilead is accused of intentionally withholding from the market its safer and 

potentially more effective TAF-based HIV treatments in order to extend the sales window 

for its more dangerous and less effective TDF-based treatments.61 

As discussed above, multiple parties have alleged that Gilead shelved the

development of TAF after receiving approval for Truvada, even though Gilead knew that 

TAF was a safer product.

62 Gilead then allegedly waited to resume development and 

 58 Id. at 41, 38–42.

59 Id. at 46. On April 21, 2020, the plaintiffs in the Staley Action filed an amended 

complaint, and on May 4, Gilead filed a motion to dismiss the amended complaint. See

JX-175 (motion to dismiss amended complaint); JX-244 (amended complaint). 

60 See JX-117; see also JX-118 at 3 (“The allegations are similar to those made in four 

consolidated class actions against Gilead pending in the Northern District of 

California.”).

61 See JX-252; see also PTO ¶ 4 (noting that “Gilead has been named as a defendant in 

product liability lawsuits related to Gilead’s HIV medications”).

62 See, e.g., JX-244 ¶¶ 236–98; JX-252.
15

commercialization of TAF-based products until the introduction of generic TDF-based 

treatments was imminent.63

Gilead is the subject of at least 250 tort actions pending in state and federal courts 

in California, Delaware, and Florida. The actions involve more than 15,000 plaintiffs

claiming that Gilead’s TDF-based HIV medications caused them to suffer personal injury 

and economic loss.64 If those claims are successful, Gilead “could be required to pay 

significant monetary damages.”65 

3. Patent Infringement

Gilead is accused of infringing on government patents in the sales of its HIV PrEP 

treatments.

The U.S. government claims that when administered as a PrEP treatment, Truvada 

and Descovy rely on patents developed by the Centers for Disease Control and 

Prevention (“CDC”) and owned by the U.S. government.66 

During a May 2019 hearing before the U.S. House Committee on Oversight and 

Reform, an expert in HIV research and clinical care testified: 

The US Government is by far the majority funder of PrEP 

research. PrEP regimen selection was guided by research 

conducted by scientists at the CDC who demonstrated that 

adding emtricitabine to a tenofovir regimen increased 

protection. . . . The critically important research done by 

scientists at the CDC led to a US Government patent on the 

 63 See JX-244 ¶¶ 236–98; JX-252.

64 See JX-134 at 80; JX-255 at 2.

65 PTO ¶ 4; JX-134 at 80.

66 JX-73 at 1.
16

combined use of emtricitabine and tenofovir esters for 

PrEP. . . . Gilead Sciences did not provide leadership, 

innovation, or funding for these projects; Gilead’s role was 

limited to donating study medication and placebos. Our 

protocols were shared with Gilead, in accordance with an 

agreement between the [National Institutes of Health] and 

Gilead; I do not recall receiving any comments.67

On November 6, 2019, the U.S. government filed suit against Gilead.68 The 

complaint alleges that Gilead has wrongfully denied the validity of the CDC’s patents 

and refused to obtain a license from the CDC to use the patented regimens.69

In February 2020, the Patent Trial and Appeals Board declined to institute 

Gilead’s petitions for inter partes review of the four U.S. government-held patents, 

finding that Gilead “has not demonstrated a reasonable likelihood of prevailing.”70 

In April 2020, Gilead filed a lawsuit against the U.S. government related to the use 

of the same anti-HIV regimens.

71 Gilead’s complaint alleges that the CDC breached the 

 67 JX-76 at 2. The expert, Professor Robert M. Grant, is a credible source. As he 

explained to the committee, he had decades of experience “with research and clinical care 

related to HIV,” “pioneered research on PrEP that led to FDA approval in 2012 [and] 

recommendations from the CDC in 2014,” and “devoted . . . 20 years of [his] career to 

the development of PrEP.” Id.

68 JX-98; see also JX-99 (11/8/19 New York Times article discussing the lawsuit); JX102 (11/8/19 Science Magazine article discussing the lawsuit).

69 Id. ¶¶ 8–9.

70 JX-246 at 21; JX-247 at 12.

71 JX-170, Gilead Scis., Inc. v. United States, 1:20-cv-00499-CFL (Fed. Cl. Apr. 24, 

2020).
17

agreements between the parties and the government’s patents are therefore invalid and 

unenforceable.72

4. False Claims Act Violations

Gilead is currently facing a federal investigation and civil litigation related to 

alleged violations of the False Claims Act.73

Under federal law, drug companies cannot provide direct copayment assistance to 

patients covered by Medicare.74 Drug companies are permitted to donate to charities that 

help Medicare patients, so long as the companies’ donations do not exert sway over the 

nonprofit’s operations.75 If a drug company uses donations to encourage a nonprofit to 

promote the company’s products, however, that conduct may violate anti-kickback 

laws.76

On May 27, 2016, Gilead received a subpoena from the U.S. Attorney for the 

District of Massachusetts seeking documents related to the Company’s relationship with 

nonprofits that provide financial assistance to patients.77 Corporate disclosures “describe 

an expanding investigation by the U.S. Attorney’s Office” into Gilead and other 

 72 Id. ¶¶ 1–21.

73 See JX-50; JX-88.

74 JX-51 at 1.

75 Id.

76 Id.

77 JX-50.
18

pharmaceutical companies’ potential kickback violations.78 In December 2017, one of 

the companies agreed to pay $210 million to resolve the Justice Department’s claims.

79 

C. The Inspection Demands

The plaintiffs are Deborah Pettry, Gail Friedt, Richard C. Collins, Hollywood 

Police Officers’ Retirement System (“Hollywood”), and Anthony Ramirez (collectively,

“Plaintiffs”). Each Plaintiff made a written demand on Gilead to inspect and copy certain 

books and records of the Company pursuant to Section 220 (collectively, the 

“Demands”).

80 The Demands sought to investigate possible wrongdoing in connection 

with aspects of the development and commercialization of Gilead’s HIV treatments.81 

 78 JX-51.

79 JX-61. Gilead is also facing a qui tam action alleging False Claims Act violations 

related to the Company’s TDF- and TAF-based Hepatitis-B treatments. JX-88. On

September 19, 2019, a group of plaintiffs filed a second amended qui tam complaint 

against Gilead in Pennsylvania federal court, alleging multiple violations of the antikickback provisions of the False Claims Act. See id. ¶¶ 1, 12–13. The complaint alleges 

that Gilead used its speaker program and other methods to encourage healthcare 

providers to write prescriptions for Gilead’s name-brand drugs as opposed to generics. 

Id. ¶¶ 1–6. In particular, the complaint alleges that Gilead used illegal kickbacks to 

encourage healthcare providers to transition patients from Viread, a TDF-based drug that 

was about to face generic competition, to Vemlidy, its new TAF-based drug. Id. ¶¶ 30–

35.

80 See JX-103 (Collins’s 12/2/19 inspection demand); JX-114 (Collins’s 1/13/20 reply to 

Gilead’s initial response); JX-128 (Collins’s 2/18/20 supplemental demand); JX-108 

(Pettry’s 12/30/19 inspection demand); JX-113 (Friedt’s 1/8/20 inspection demand); JX120 (Pettry and Friedt’s 1/29/20 consolidated reply to Gilead’s initial response); JX-123 

(Ramirez’s 2/4/20 inspection demand); JX-136 (Ramirez’s 2/27/20 reply to Gilead’s 

initial response); JX-124 (Hollywood’s 2/10/20 inspection demand). 

81 See infra note 95 and accompanying text.
19

Gilead declined to provide even a single document in response to any of the 

Demands, taking the position that each Demand was unfounded and deficient.82

D. This Litigation

Each Plaintiff filed suit under Section 220 to enforce their inspection rights, with 

Pettry and Friedt filing a joint complaint.

83 Gilead answered the complaints.84 

Gilead requested that the court enter and order requiring Plaintiffs to coordinate 

their efforts,85 and the parties stipulated to a coordinated schedule and approach to

discovery.86

Gilead served interrogatories on, sought documents from, and moved to compel 

discovery from Plaintiffs.87 Gilead also deposed each Plaintiff.88

 82 See JX-106 (Gilead’s 12/10/19 response to Collins’s initial demand); JX-130 (Gilead’s 

2/25/20 response to Collins’s supplemental demand); JX-115 (Gilead’s 1/15/20 response 

to Pettry’s demand); JX-116 (Gilead’s 1/15/20 response to Friedt’s demand, containing 

multiple mistaken references to “Ms. Pettry” as opposed to “Ms. Friedt”); JX-126 

(Gilead’s 2/14/20 response to Pettry and Friedt’s 1/29/20 communication); JX-125 

(Gilead’s 2/11/20 response to Ramirez’s 2/4/20 demand); JX-139 (Gilead’s 3/2/20 

response to Ramirez’s 2/27/20 communication); JX-127 (Gilead’s 2/18/20 response to 

Hollywood’s demand); JX-131 (Gilead’s 2/25/20 rejection of Hollywood’s invitation to 

meet and confer). 

83 See JX-132; JX-137; JX-140; JX-141; see also JX-129.

84 JX-142; JX-144; JX-261; JX-262.

85 Dkt. 5, Def.’s Resp. to Pls.’ Mots. for Expedited Proceedings at 5–6 (“Gilead 

respectfully submits that the Court should enter an order coordinating the actions.”).

86 Dkt. 8, Stipulation and Appointment of Counsel and Case Scheduling Order.

87 See JX-147 (Def.’s First Set of Interrogs. Directed to Pls.); JX-148 (Def.’s First Set of 

Reqs. for Produc. of Docs. Directed to Pls.); Dkt. 38, Def.’s Mot. to Compel Disc. from 

Pls. Plaintiffs provided Defendants with responses and supplemental responses to these 

requests. See JX-155; JX-156; JX-157; JX-158; JX-159; JX-160; JX-161; JX-162; JX163; JX-167; JX-169. 
20

Gilead fought discovery directed to it and moved for a protective order, which the 

court denied.89 

The court held trial on June 23, 2020, and the parties completing post-trial briefing 

on August 26, 2020.

II. LEGAL ANALYSIS

To inspect books and records under Section 220, a plaintiff must establish by a 

preponderance of the evidence that the plaintiff is a stockholder, has complied with the 

statutory form and manner requirements for making a demand, and has a proper purpose 

for conducting the inspection.90 If a stockholder meets these requirements, the 

stockholder must then establish “that each category of the books and records requested is 

essential and sufficient to the stockholder’s stated purpose.”91 

Gilead disputes two of these requirements, arguing that Plaintiffs lack proper 

purposes and have failed to justify the scope of their inspections. Gilead also raises what 

it refers to as “standing” issues, arguing that Plaintiffs must overcome defenses to 

anticipated derivative claims in order to have standing to enforce their rights in this 

 88 See Dkt. 82.

89 See Dkt. 17, Def.’s Mot. for Protective Order; Dkt. 65, May 8, 2020 Oral Arg. re Def.’s 

Mot. for Protective Order and the Ct.’s Ruling; see also JX-164 (Def’s. Responses and 

Objs. to Pls.’ Am. First Set of Interrogs. Directed to Def. Gilead Sciences, Inc.); JX-149 

(Pls.’ Am. Notice of Rule 30(b)(6) Dep. of Def. Gilead Sciences, Inc.).

90 See 8 Del. C. § 220(c); Cent. Laborers Pension Fund v. News Corp., 45 A.3d 139, 144 

(Del. 2012); Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 775 (Del. Ch. 2016), 

abrogated on other grounds by Tiger v. Boast Apparel, Inc., 214 A.3d 933 (Del. 2019).

91 Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026, 1035 (Del. 1996) (citing 

Helmsman Mgmt. Servs., Inc. v. A & S Consultants, Inc., 525 A.2d 160, 167 (Del. Ch. 

1987)). 
21

Section 220 action. Gilead’s so-called “standing” arguments in substance speak to 

Plaintiffs’ proper purposes and this decision addresses the arguments in that context.

A. Each Plaintiff Has Demonstrated a Proper Purpose.

“The paramount factor in determining whether a stockholder is entitled to 

inspection of corporate books and records is the propriety of the stockholder’s purpose in 

seeking such inspection.”92 A purpose is “proper” under Section 220 where it is 

“reasonably related” to the stockholder’s interest as a stockholder.93 “In a section 

220 action, a stockholder has the burden of proof to demonstrate a proper purpose by a 

preponderance of the evidence.”94 

The Demands state that they are for the purpose of investigating possible 

mismanagement, wrongdoing, or waste in connection with aspects of the development 

and commercialization of Gilead’s HIV treatments, although each Demand uses slightly 

different verbiage to express this purpose.95 

 92 CM & M Gp., Inc. v. Carroll, 453 A.2d 788, 792 (Del. 1982) (citing 8 Del. C. § 220(b); 

Gen. Time Corp. v. Talley Indus., 240 A.2d 755 (Del. 1968); Skoglund v. Ormand Indus., 

372 A.2d 204, 207 (Del. Ch. 1976)). 

93 8 Del. C. § 220(b). 

94 Seinfeld, 909 A.2d at 121.

95 Collins seeks to “[i]nvestigat[e] whether any member of the Board or the Company’s 

senior officers have mismanaged the Company and/or breached their fiduciary duties to 

the Company and its stockholders.” JX-103 at 5; JX-128 at 15. Friedt and Petty seek to 

“investigate potential corporate mismanagement, wrongdoing, and waste by fiduciaries of 

the Company, including the [Board].” JX-108 at 1; JX-113 at 1. Hollywood seeks to 

investigate “possible breaches of fiduciary duty,” “possible violations of positive law,” 

“possible corporate misconduct by members of the [Board] and/or management in 

connection with . . . core HIV products,” and “possible prolonged concealment of the 

misconduct described herein.” JX-124 at 1. Ramirez seeks to “investigate whether the 
22

Although a stockholder’s desire to investigate wrongdoing is a proper purpose

under Delaware law,96 a mere statement of that purpose without more will not entitle a 

stockholder to inspection.97 To inspect documents for the purpose of investigating 

mismanagement or wrongdoing, a stockholder “must present some evidence to suggest a 

credible basis from which a court can infer that mismanagement . . . or wrongdoing may 

have occurred.”98 

 

[Board] and certain senior Gilead executives may have breached their fiduciary duties to 

the Company by engaging in massive and long-standing wrongdoing in connection with 

the Company’s development, patenting, marketing of, and restraints related to, its 

antiviral HIV/AIDS drugs.” JX-89 at 4. Some of the demands also state that they are for 

the purpose of assessing the independence and disinterestedness of the members of the 

Board with respect to the possible wrongdoing at issue, see JX-124 at 1; JX-103 at 5; JX128 at 15, but Plaintiffs did not treat this as an independent purpose in briefing. See Dkt. 

100, Pls.’ Corrected Combined Post-Trial Br. (“Pls.’ Opening Br.”) at 3–45, 56; Dkt. 104, 

Pls.’ Combined Post-Tr. Reply Br. at 3–24, 32. This decision treats Plaintiffs’ desire to 

investigate the independence and disinterestedness of Gilead’s Board members as a 

component of its investigation into possible wrongdoing. See infra Section II.C.2.e.

96 E.g., KT4 P’rs v. Palantir Techs. Inc., 203 A.3d 738, 758 (Del. 2019) (“One of the 

most traditional proper purposes for a § 220 demand is the investigation of possible 

wrongdoing by management. When a stockholder has made a colorable showing of 

potential wrongdoing, inspecting the company’s books and records can help the 

stockholder to ferret out whether that wrongdoing is real and then possibly file a lawsuit 

if appropriate.” ); City of Westland Police & Fire Ret. Sys. v. Axcelis Techs., Inc., 1 A.3d 

281, 287 (Del. 2010) (“Our law recognizes investigating possible wrongdoing or 

mismanagement as a ‘proper purpose.’”); Seinfeld, 909 A.2d at 121 (“It is well 

established that a stockholder’s desire to investigate wrongdoing or mismanagement is a 

‘proper purpose.’ Such investigations are proper, because where the allegations of 

mismanagement prove meritorious, investigation furthers the interests of all stockholders 

and should increase stockholder return.”).

97 Seinfeld, 909 A.2d at 122 (quoting Helmsman, 525 A.2d at 166).

98 Id. at 118 (internal quotation marks omitted).
23

Gilead argues that no Plaintiff has demonstrated a credible basis to suspect 

possible wrongdoing.99 Gilead further argues that each Plaintiff is acting as a 

Manchurian candidate for a law firm such that none of Plaintiffs’ stated purposes are their

own.100 Gilead additionally argues that legal defenses to a follow-on lawsuit challenging 

the wrongdoing foreclose Plaintiffs’ ability to investigate possible wrongdoing under 

Section 220.101 

1. Plaintiffs Have Demonstrated a Credible Basis to Suspect

Wrongdoing.

The credible basis standard imposes “the lowest possible burden of proof.”102 It 

does not require a stockholder to prove that the wrongdoing “actually occurred.”103 Nor 

does it require a stockholder “to show by a preponderance of the evidence that 

wrongdoing is probable.”104 Any such requirement “would completely undermine the 

purpose of Section 220 proceedings, which is to provide shareholders the access needed 

to make that determination in the first instance.”105 Rather, a stockholder need only 

 99 Dkt. 102, Def. Gilead Sciences, Inc.’s Post-Trial Answering Br. (“Def.’s Answering 

Br.”) at 5–15.

100 Id. at 22–36.

101 See id. at 36–44.

102 Seinfeld, 909 A.2d at 123.

103 Marmon v. Arbinet-Thexchange, Inc., 2004 WL 936512, at *4 (Del. Ch. Apr. 28, 

2004); accord. Thomas & Betts, 681 A.2d at 1031 (“While stockholders have the burden 

of coming forward with specific and credible allegations sufficient to warrant a suspicion 

of waste and mismanagement, they are not required to prove by a preponderance of the 

evidence that waste and mismanagement are actually occurring.”).

104 AmerisourceBergen, 2020 WL 132752, at *8. 

105 La. Mun. Police Emps.’ Ret. Sys. v. Countrywide Fin. Corp. (LAMPERS), 2007 
24

establish by a preponderance of the evidence that there is a credible basis to suspect a 

possibility of wrongdoing.106 

In determining whether a plaintiff has presented a credible basis for inspection, the 

court looks at the allegations collectively.107 The “threshold may be satisfied by a 

credible showing, through documents, logic, testimony or otherwise, that there are 

legitimate issues of wrongdoing.”108 When evaluating whether a credible basis exists, the 

court may consider on-going lawsuits, investigations, circumstantial evidence, and even 

hearsay statements evincing possible wrongdoing.109

 

WL 2896540, at *12 (Del. Ch. Oct. 2, 2007), order clarified, 2007 WL 4373116 (Del. 

Ch. Dec. 6, 2007).

106 See AmerisourceBergen, 2020 WL 132752, at *8–9; see also Seinfeld, 909 A.2d at 

118 (holding that a Section 220 plaintiff need only allege a “‘credible basis’ from which a 

court can infer that mismanagement, waste or wrongdoing may have occurred” (emphasis 

added)).

107 See, e.g., In re Lululemon Athletica Inc. 220 Litig., 2015 WL 1957196, at *11–14 

(Del. Ch. Apr. 30, 2015) (collectively assessing founder’s inside knowledge based on 

company emails, suspicious timing and magnitude of founder’s trades, and the speed at 

which founder hit his monthly trading cap); Paul v. China MediaExpress Hldgs., Inc., 

2012 WL 28818, at *4 (Del. Ch. Jan. 5, 2012) (determining that plaintiff had identified a 

credible basis for Section 220 demand based on evidence which included “numerous 

third-party media reports,” “the noisy resignations of three board members” and a 

publicly announced “internal investigation”).

108 Seinfeld, 909 A.2d at 123 (quoting Sec. First Corp. v. U.S. Die Casting & Dev. Co., 

687 A.2d 563, 568 (Del. 1997)). 

109 See, e.g., AmerisourceBergen, 2020 WL 132752, at *9 (“Ongoing investigations and 

lawsuits can provide the necessary evidentiary basis to suspect wrongdoing or 

mismanagement warranting further investigation. This type of evidence is strong when 

governmental agencies or arms of law enforcement have conducted the investigations or 

pursued the lawsuits.”); LAMPERS, 2007 WL 2896540, at *10–12 (finding a news article 

and independent statistical analysis of stock option grant dates sufficient to suspect 

options backdating); Elow v. Express Scripts Hldgs. Co., 2017 WL 2352151, at *5, *5–6 
25

The Demands seek to investigate four categories of possible wrongdoing: 

1. Anticompetitive activity resulting in a multi-billion dollar lawsuit accusing 

Gilead of violating federal and state antitrust laws by colluding with its 

competitors to unlawfully extend patent protection and drive up the price of 

its HIV drugs;110

2. Mass torts resulting in more than 15,000 claims by plaintiffs who allege

that they were seriously harmed by Gilead’s decision to intentionally delay 

the introduction of safer and more effective HIV treatments in order to 

protect the profitability of existing branded medications;111

3. Patent infringement resulting in a lawsuit by the DOJ against Gilead for its 

“deliberate” and “wanton” infringement of patents held by the federal 

government relating to PrEP treatment regimens;112 and

4. Kick-back schemes resulting in DOJ investigations into False Claims Act 

violations.

113

At trial, Plaintiffs presented evidence to establish a credible basis to suspect 

possible wrongdoing in connection with each of these four categories.

To demonstrate a credible basis as to the anticompetitive activity, Plaintiffs rely 

primarily on the allegations and information contained in the Staley complaint as well as 

the federal court’s decision on the motion to dismiss the Staley Action.114 The Staley

 

(Del. Ch. May 31, 2017) (finding “pleadings in the Anthem Action, the Securities Action 

complaints, and public statements by Express Scripts” sufficient to establish a credible 

basis), abrogated on other grounds by Tiger, 214 A.3d 933; Carapico v. Phila. Stock 

Exch., Inc., 791 A.2d 787, 792 (Del. Ch. 2000) (finding an “SEC inquiry” and “SEC 

Order” were “sufficiently concrete” to suspect mismanagement).

110 See JX-113 at 1; JX-123 at 1–2; JX-124 at 4; JX-128 at 1.

111 See JX-124 at 3–4; JX-128 at 1.

112 See JX-103 at 1; JX-113 at 1; JX-124 at 5–6; JX-128 at 1.

113 See JX-128 at 1.

114 See Pls.’ Opening Br. at 7–9.
26

complaint spans 134 pages and outlines a litany of allegedly anticompetitive conduct,

reflecting significant research by the plaintiffs in that action.

115 The parties to the Staley

Action collectively filed thirty-eight exhibits during briefing on a motion to dismiss, 

including copies of the relevant agreements.116 

The Staley complaint discusses three broad categories of conduct that allegedly 

delayed the entry of generic competition: (i) No-Generics Restraints in agreements 

between Gilead and Japan Tobacco, Gilead and Bristol-Myers, and Gilead and Janssen;

(ii) the Teva settlement; and (iii) the commercialization of TAF.117 These categories of 

action are allegedly part of a broader scheme to restrain competition and increase the 

prices of HIV drugs.

118 The complaint contends that the No-Generics Restraints barred 

the creation of competing versions of combination therapies that use generic TDF.119 

The complaint further contends that the Teva settlement delayed Teva’s entry in the TDF 

market and created disincentives for ANDA second-filers to launch their products. By 

thwarting the market entry of generic TDF, these agreements allowed Gilead to continue 

to charge high prices for TDF-based Stribild despite its toxicity, and later help Gilead 

 115 See JX-74.

116 See Decl. of Jayne A. Goldstein in Supp. of Pls.’ Omnibus Mem. in Opp’n to Defs.’ 

Mot. to Dismiss, Staley v. Gilead Scis., Inc., Case No. 3:19-cv-02573-EMC (N.D. Cal. 

2019); Decl. of Heather M. Burke in Supp. Of Gilead’s Mot. to Dismiss, Staley, Case No. 

3:19-cv-02573-EMC. The court can take judicial notice of these filings because they are 

“not subject to reasonable dispute.” See, e.g., In re Gen. Motors (Hughes) S’holder 

Litig., 897 A.2d 162, 169 (Del. 2006) (citing D.R.E. 201(b)).

117 See JX-74 ¶¶ 88–355.

118 Id. ¶¶ 1–15. 

119 Id. ¶ 4.
27

shift prescriptions from Stribild to TAF-based Genvoya.120 The agreements also allowed 

Gilead to avoid being pressured to release a standalone TAF product, because prescribers 

could not pair Gilead’s standalone TAF with drugs offered by Gilead’s competitors.

121

The plaintiffs allege that Gilead’s actions, taken collectively, “unlawfully manipulated 

the regulatory framework in order to impair and delay . . . competition.”122

In response to Gilead’s motion to dismiss, the District Court held that the 

plaintiffs’ allegations regarding the Gilead/Bristol-Myers, Gilead/Janssen, and 

Gilead/Teva agreements and the commercialization of TAF stated a claim on which relief 

could be granted.

123 The federal motion-to-dismiss standard is higher than Section 220’s

credible basis standard.124 It follows that allegations which survive a motion to dismiss 

under the federal standard are sufficient to meet the credible basis standard. Thus, the 

court finds that the allegations that survived the motion to dismiss in the Staley Action

 120 Id. ¶¶ 237–44.

121 Id. ¶ 245.

122 Id. ¶ 285.

123 See JX-242 at 85–86. The court dismissed the overarching conspiracy claims and the 

claim related to the Gilead/Japan Tobacco agreement. JX-242 at 15, 33. Plaintiffs have 

since filed an amended complaint. See JX-244.

124 Compare Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (requiring a plaintiff 

to plead facts sufficient to “nudge[] their claims across the line from conceivable to 

plausible”) and Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (requiring a Section 220 

plaintiff seeking to investigate wrongdoing to holding that the Twombly plausibility 

standards applies to all civil cases in federal courts) with Seinfeld, 909 A.2d at 123 

(describing the credible basis standard as “the lowest possible burden of proof” (internal 

quotation markets omitted)).
28

supply a credible basis to suspect possible wrongdoing as to the Gilead/Bristol-Myers, 

Gilead/Janssen, and Gilead/Teva agreements and the commercialization of TAF.

To demonstrate a credible basis as to the mass torts, Plaintiffs rely on the 

allegations and information in the pleadings in state and federal courts in California, 

Delaware, and Florida.125 The mass tort class action in California, as of June 12, 2020, 

involved more than 15,000 plaintiffs.126 The complaint in that action runs forty-four

pages, alleges injuries stemming from Gilead’s decision to intentionally delay its TAFbased HIV drugs, and asserts claims for negligence, strict product liability, breach of 

express warranty, breach of implied warranty, fraud, and concealment.127 In particular, 

the complaint alleges that Gilead developed and marketed its toxic TDF-based 

medications and withheld the safer TAF-based medications from the market.128 Rather 

than releasing the TAF-based medication, Gilead allegedly continued to add ingredients

to its existing TDF-based medications “in order to extend its monopoly on tenofovir in 

the treatment of HIV-1.”129 The plaintiffs contend that Gilead did so knowing that 

reasonable alternatives were not available to patients.130 The complaint references and 

 125 Pls.’ Opening Br. at 9–11.

126 JX-255 at 2.

127 See JX-82. Further illustrating the scope of the litigation, Gilead produced nearly 2.6 

million pages of documents in response to the plaintiffs’ first and second requests for 

production—including FDA regulatory files, license agreements, a listing of clinical 

trials, and other documents—and trial is set for January 2022. See id.; JX-255 at 10–11.

128 JX-82 ¶¶ 12–14, 33–48.

129 Id. ¶¶ 76, 51–86.

130 Id. ¶ 2.
29

quotes from papers that Gilead has published, submissions that Gilead made to U.S. and 

European patent offices, public announcements by Gilead representatives, statistics that 

have been corroborated by the CDC, studies conducted by third parties, and FDA 

findings.131 The plaintiffs’ complaint is cohesive and coherent, and the information and 

allegations in the complaint as well as the myriad evidence supporting it, supply a 

credible basis to suspect possible wrongdoing in the form of mass torts.

To demonstrate a credible basis as to patent infringement, Plaintiffs rely on

congressional testimony and subsequent litigation regarding Gilead’s alleged 

infringement of U.S. government patents in the sales of Gilead’s HIV PrEP treatments.

132 

After an expert provided the U.S. House Committee on Oversight with a detailed 

description of his work with the CDC and Gilead,133 the U.S. government filed a patent 

infringement lawsuit against Gilead.134 The complaint totaled 1,739 pages including the 

ninety-two attached exhibits, and its filing was reported by multiple news outlets.

135 The 

 131 See, e.g., id. ¶ 40 (quoting Gilead paper comparing the relative effectiveness and 

safety of TAF as compared to TDF); id. ¶ 41 (citing Gilead patent submission showing 

that TAF was more effective than TDF); id. ¶ 60 (citing an October 2004 company 

announcement regarding the future of TAF development); id. ¶ 67 (citing HIV-treatment 

statistics that have been corroborated by the CDC); id. ¶ 78 (citing an April 2012 HIV 

study conducted by researchers at San Francisco’s Veterans’ Administration Medical 

Center and the University of California, San Francisco); id. ¶ 79 (quoting FDA 

characterization of TDF’s safety profile); id. ¶ 91 (quoting Gilead’s Chief Scientific 

Officer during an October 2010 earnings call).

132 Pls.’ Opening Br. at 11–14.

133 See supra note 67 and accompanying text.

134 See JX-98.

135 See id. (complaint); JX-99 (11/8/19 New York Times article covering the litigation); 
30

exhibits included the relevant patents, various news articles, and relevant scholarship 

from the scientific community.136 When Gilead sought review of the U.S. government’s 

patents, the Patent Trial and Appeals Board held that Gilead “has not demonstrated a 

reasonable likelihood of prevailing.”137 The thoroughness of the U.S. government’s 

complaint and the Patent Trial and Appeals Board’s ruling easily clear the hurdle to 

establish a credible basis to suspect possible wrongdoing as to patent infringement.

To demonstrate a credible basis as to False Claims Act violations, Plaintiffs rely 

on the existence of four subpoenas issued by the DOJ.

138 By 2016, Gilead was the 

subject of an “expanding investigation” by the U.S. Attorney for the District of 

Massachusetts related to possible violations of the False Claims Act.

139 As disclosed in 

its public filings, Gilead received subpoenas in 2016 and 2017 requesting documents 

related to Gilead’s relationship with certain charitable organizations, Gilead’s copay 

coupon program, and Gilead’s Medicaid price reporting methodology.140 

Further, Gilead is facing a qui tam action in Pennsylvania federal court that alleges 

multiple violations of the anti-kickback provisions of the False Claims Act.141 Although 

that action focuses on Hepatitis B-providers, one of the drugs at issue (Viread) is also 

 

JX-102 (11/8/19 Science Magazine article covering the litigation).

136 See JX-98 at 77–1739.

137 JX-246 at 21; JX-247 at 12.

138 See Pls.’ Opening Br. at 14–15.

139 See JX-51 at 1.

140 JX-134 at 79.

141 See JX-88 at ¶¶ 1, 13.
31

used to treat HIV.

142 The complaint alleges that Gilead provided healthcare providers 

with illegal kickbacks in exchange for prescribing Gilead products.

143 It contains public 

payment information from relevant healthcare providers to Gilead, detailed information 

regarding the composition of Gilead’s advisory boards, public pricing information 

regarding the drugs at issue, and quotes from internal emails referencing the speaker 

programs.144 The combination of multiple government investigations relating to possible

False Claims Act violations plus the ongoing qui tam litigation alleging the exact same 

conduct with respect to Gilead’s Hepatitis B business, establishes a credible basis to 

suspect possible wrongdoing as to False Claims Act violations. 

Gilead takes issue with Plaintiffs’ reliance on the complaints in the other lawsuits, 

contending that unsubstantiated allegations cannot supply a credible basis to suspect 

possible wrongdoing.

145 As discussed above, however, the credible basis requirement 

does not require that allegations of wrongdoing be substantiated or even probable;

146 they 

only need be credible. One of the reasons why Delaware courts urge stockholders to 

conduct pre-suit investigations is to investigate allegations before filing plenary litigation

 142 See id.; see also JX-55 (noting that Vemlidy is a TAF-based drug and an alternative to 

Viread).

143 JX-88 ¶¶ 58–99.

144 Id. ¶ 64 & n.2 (citing “Open Payment” information, which is defined as “payments 

that are not associated with a research study such as compensation, food and beverage 

and lodging”); id. ¶ 69 (listing 2017 advisory boards and each of their composition); id. ¶ 

76 (listing prices of drugs at issue in the litigation); id. ¶ 134 (quoting an internal email 

that allegedly read: “Let them hear the Message for $3,000”).

145 See Def.’s Answering Br. at 5–22.

146 See supra notes 102–09 and accompanying text.
32

to determine whether they are substantiated. In furtherance of that objective, this court 

attempts to avoid “placing an unduly difficult obstacle in the path of stockholders seeking 

to investigate . . . mismanagement.”147 The allegations, information, and evidence in the 

complaints on which Plaintiffs rely meet this standard for the reasons discussed above. 

Requiring that Plaintiffs demonstrate more would place “an unduly difficult obstacle” in 

the path of stockholders.

The parties also dispute whether Plaintiffs have presented evidence demonstrating 

that Gilead’s board of directors and senior officers were aware of the categories of 

alleged wrongdoing.148 Such a showing is not required to support a credible basis where, 

as here, Plaintiffs have not limited their purposes to pursuing derivative claims.149 If 

Plaintiffs must demonstrate a credible basis to suspect wrongdoing at the level of the 

board or senior management, then they have done so. Gilead’s HIV drugs generate 73% 

of Gilead’s revenue and were thus “intrinsically critical to the company’s business 

operation.”150 There is thus a credible basis to suspect that the board and senior 

management knew about the possible wrongdoing. If they did not, there is a credible 

 147 See Thomas & Betts, 681 A.2d at 1032.

148 See Pls.’ Opening Br. at 15–17; Def.’s Answering Br. at 14–15. 

149 See AmerisourceBergen, 2020 WL 132752, at *15, *19. 

150 See Marchand v. Barnhill, 212 A.3d 805, 822 (Del. 2019); accord. In re Caremark 

Int’l Inc. Deriv. Litig., 698 A.2d 959, 967–70 (Del. Ch. 1996). 
33

basis to suspect that they failed to monitor a business segment that was “mission critical,” 

as well as vitally important to the lives of millions of people.151

2. Plaintiffs’ Purposes Are Their Own.

Only one Plaintiff must demonstrate a proper purpose for the court to grant some 

level of inspection. Thus, for Gilead to avoid inspection entirely, Gilead must 

accomplish the difficult task of undermining all five Plaintiffs’ purposes. Gilead’s 

primary argument toward this end is that each Plaintiff was a passive conduit in a purely 

lawyer-driven endeavor and thus lacks a proper purpose under Wilkinson v. A. Schulman, 

Inc.

152 Gilead bears the burden of proving this defense.153

In Wilkinson, the plaintiff’s deposition testimony revealed a discrepancy between 

the plaintiff’s actual purpose and the stated purpose in the demand.

154 The plaintiff 

wanted to investigate the company’s negative financial results, but the demand sought to 

investigate a board decision to accelerate equity awards.155 Wilkinson’s counsel had

ignored his client’s purpose and chose to send a demand concerning the counsel’s 

 151 See Marchand, 212 A.3d at 824.

152 See Def.’s Answering Br. at 22–36 (citing 2017 WL 5289553 (Del. Ch. Nov. 13, 

2017)).

153 See Inter-Local Pension Fund GCC/IBT v. Calgon Carbon Corp., 2019 WL 479082, 

at *9 (Del. Ch. Jan. 25, 2019) (“A corporate defendant may resist demand where it shows 

that the stockholder’s stated proper purpose is not the actual purpose for the demand. 

However, in order to succeed, the defendant must prove that the plaintiff pursued its 

claim under false pretenses. Such a showing is fact intensive and difficult to establish.” 

(internal quotation marks omitted)), aff’d 237 A.3d 818 (Del. 2020).

154 See Wilkinson, 2017 WL 5289553, at *2–3.

155 Id.
34

purpose.

156 The disconnect between the client and counsel persisted through the Section 

220 enforcement action.157 Wilkinson verified the complaint, but he did nothing to 

confirm the accuracy of its allegations and knew nothing about the inspection process or 

litigation.158 He failed to play any meaningful role in the litigation and testified that he 

was unaware of any facts concerning the wrongdoing that his counsel sought to 

investigate.159 This confluence of unusual facts led the court to find that the plaintiff 

lacked a proper purpose.160

Gilead fails to prove that the facts of this case rise to the level seen in Wilkinson. 

In this case, Plaintiffs testified that they actually sought to investigate wrongdoing.161

They reviewed their respective Demands and complaints prior to authorizing their service 

and filing.

162 For the most part, they were knowledgeable about the basis for their 

Demands.163 They remained in contact with their respective counsel throughout the 

 156 Id.

157 See id.

158 Id. at *3.

159 Id. at *2–3.

160 See id. at *2–4; see also Calgon Carbon, 2019 WL 479082, at *9 (noting that the

“misalignment of goals between the stockholder and his counsel was a key factor in the 

[Wilkinson] Court’s determination that there was no proper purpose for the demand.”).

161 See Collins Dep. Tr. at 86:22–87:11; Friedt Dep. Tr. at 65:24–66:8; Pettry Dep. Tr. at 

77:5–78:11; Trial Tr. at 12:23–13:15 (Ramirez); Ramirez Dep. Tr. at 87:15–19, 98:6–7, 

119:9–22; Williams Dep. Tr. at 57:22–58:10.

162 See Collins Dep. Tr. at 67:21–24; Friedt Dep. Tr. at 74:18–22, 111:18–112:12, 

124:42–125:2; Pettry Dep. Tr. at 59:15–61:21, 101:9–18; Trial Tr. at 12:20–22 

(Ramirez); Ramirez Dep. Tr. at 58:22–24; Williams Dep. Tr. at 54:21–24, 77:5–18.

163 See Collins Dep. Tr. at 95:17–113:22; Pettry Dep. Tr. at 79:16–82:17; Trial Tr. at 
35

demand process and litigation.164 This testimony is sufficient to establish that Plaintiffs’

purposes are their own.

To be sure, Gilead proved that lawyers were heavily involved in the process, but 

that is to be expected considering the significant role lawyers play in representative

litigation generally. 

On that point, In re Fuqua Industries, Inc. Shareholder Litigation165 is instructive. 

There, former Chancellor Chandler denied a motion to disqualify a derivative plaintiff 

who was unfamiliar with the basic facts of the case and largely deferred control of the 

litigation to counsel.166 After canvasing state and federal case law concerning the 

adequacy standard imposed on derivative plaintiffs, the court held that the plaintiffs’ bare 

knowledge of the “basic facts” was sufficient to meet the adequacy requirement, and that 

 

12:23–13:15, 32:5–34:4 (Ramirez); Ramirez Dep. Tr. at 50:22–53:4, 87:15–93:18; 

Williams Dep. Tr. at 58:21–62:13. Although Friedt demonstrated a general 

understanding the subject matter of her demand (see Friedt Dep. Tr. at 65:24–66:8), her 

knowledge of the basis for her demand was exceptionally weak; this fact standing alone 

does not compare to the confluence of unusual facts present in Wilkinson.

164 See Collins Dep. Tr. at 40:3–122:9; Friedt Dep. Tr. at 61:9–125:2; Pettry Dep. Tr. at 

53:6–81:18; Trial Tr. at 10:10–23, 14:8–15:8, 23:20–24:6, 41:20–42:20 (Ramirez);

Ramirez Dep. Tr. at 56:5–213:9; Williams Dep. Tr. at 23:4–85:24. Gilead accuses 

Collins of lying about who initiated the process and his level of involvement based 

mostly on Collins’ poor recall of demands he served on Gilead in 2016 and 2018 and his 

lack of direct contact with litigation counsel. See Def.’s Post-Trial Answering Br. at 28–

31. But those demands are largely irrelevant, and Collins’ sworn testimony established 

that he had reviewed the demand letters sent on his behalf and maintained contact with 

his referring counsel. See Collins Dep. Tr. at 40:3–122:9. This is sufficient to support 

the finding that Collins’ stated purposes were his own.

165 752 A.2d 126 (Del. Ch. 1999).

166 Id. at 134–37.
36

knowledge of “the particulars” was not required.167 In reaching this conclusion, the court 

observed that Delaware law provides incentives for private attorneys to bring derivative 

suits as a solution to the collective action problem, that those attorneys naturally play a

“dominant role in prosecuting litigation on behalf of clients,” and that lawyer 

involvement is particularly appropriate “in cases involving fairly abstruse issues of 

corporate governance and fiduciary duties.”168 

Of course, the adequacy requirement of Court of Chancery Rule 23.1 at issue in 

Fuqua and the proper purpose requirement of Section 220 at issue in this case are not the 

same. This decision does not suggest otherwise. The point is that Delaware courts have 

encouraged stockholders to pursue Section 220 actions in advance of derivative suits for 

decades.169 It would be inconsistent with this policy to require that Section 220 plaintiffs 

 167 Id. at 136 (“[The plaintiff] was at times quite lucid and able to independently 

communicate the basic facts and claims underlying her lawsuit. She did not know the 

particulars.”).

168 Id. at 135; id. at 133 (“Our legal system has privatized in part the enforcement 

mechanism . . . by allowing private attorneys to bring suits on behalf of nominal 

shareholder plaintiffs.”); see also In re Del Monte Foods Co. S’holders Litig., 2011 

WL 2535256, at *14 (Del. Ch. June 27, 2011) (“Delaware courts recognize the value of 

representative litigation.”); In re Revlon, Inc. S’holders Litig., 990 A.2d 940, 959 (Del. 

Ch. 2010) (“[R]epresentative litigation serves as a valuable check on managerial conflicts 

of interest. Stockholder plaintiffs can and do achieve meaningful results.” (citation 

omitted)); Bird v. Lida, Inc., 681 A.2d 399, 402–03 (Del. Ch. 1996) (explaining that 

entrepreneurial plaintiff attorneys can “pursue monitoring activities that are wealth 

increasing for the collectivity (the corporation or the body of its shareholders)”).

169 See, e.g., Cal. State Tchrs.’ Ret. Sys. v. Alvarez, 179 A.3d 824, 839 (Del. 2018) 

(“[T]his Court has repeatedly admonished plaintiffs to use the ‘tools at hand’ and to 

request company books and records under Section 220 to attempt to substantiate their 

allegations before filing derivative complaints.”); Sec. First Corp., 687 A.2d at 571 (Del. 

1997) (“[A] Section 220 proceeding may serve a salutary mission as a prelude to a 
37

know more than what is required of derivative plaintiffs. It would also be inconsistent 

with this policy to prohibit lawyers from playing a “dominant role” in Section 220 actions 

while permitting them to do so in derivative litigation. This is particularly so given the 

increasing complexities plaguing Section 220 actions.170 

The incentives in representative litigation are imperfect, and judicial oversight is 

required in Section 220 actions as elsewhere. In Fuqua, the court went on to admonish

the plaintiffs’ counsel for effectively “supplanting” his client in a deposition, explaining 

that “extreme facts call for the court to exercise its discretion and to curb the agency costs 

inherent in private regulatory and enforcement mechanisms.”171 It was similarly extreme 

 

derivative suit.”); Ash v. McCall, 2000 WL 1370341, at *15 n.56 (Del. Ch. Sept. 15, 

2000) (“As the Delaware Supreme Court has repeatedly exhorted, shareholders plaintiffs 

should use the ‘tools at hand,’ most prominently § 220 books and records actions, to 

obtain information necessary to sue derivatively.”).

170 See, e.g., Wilkinson, 2017 WL 5289553, at *3 (“A stockholder obviously can use 

counsel to seek books and records. Section 220 expressly contemplates that a 

stockholder can make a demand ‘in person or by attorney or other agent.’ Indeed, given 

the complexity of Delaware’s sprawling Section 220 jurisprudence, a stockholder is welladvised to secure counsel’s assistance.” (quoting 8 Del. C. § 220(b)); Calgon Carbon, 

2019 WL 479082, at *10 (holding that stockholders are entitled to rely on counsel “to 

raise concerns, to advise them on how to remedy those concerns, and to pursue 

appropriate remedies”); Kosinski v. GGP Inc., 214 A.3d 944, 951–52 (Del. Ch. 2019) 

(“The fact that Plaintiff sought and accepted the advice of counsel is to his credit, not his 

detriment.”); see also Cox et al., supra note 6, at 2150 (attributing the increased 

complexity in Section 220 actions to the fact that “defendants have turned books and 

records litigation into a surrogate proceeding to litigate the possible merits of the suit 

where they place obstacles in the plaintiffs’ way to obstruct them from employing it as a 

quick and easy pre-filing too”).

171 Fuqua, 752 A.2d at 133–34.
38

facts that drove the outcome in Wilkinson, where the attorneys disregarded their client’s

objectives entirely and pursued their own.

172 

In this case, the degree of lawyer involvement does not come close to the linecrossing conduct at issue in Fuqua or Wilkinson. This case reflects benign manifestations 

of the role that plaintiffs’ law firms play generally in representative litigation. 

Gilead singles out Pettry and Friedt because they were enrolled in a portfolio 

monitoring program and had no knowledge of alleged wrongdoing at Gilead before 

counsel contacted them.

173 But there is nothing inappropriate about such programs. 

They are voluntary and serve the purpose of keeping stockholders abreast of corporate 

developments that may affect the value of their stock holdings. They do not obligate 

participants to send Section 220 demands or file suits.

174 

Gilead also complains about Hollywood’s involvement in portfolio monitoring 

programs,

175 but those arguments are similarly misguided. Hollywood is a police 

officers’ retirement fund that is run by a seven-member Board of Trustees, all of whom 

 172 See Wilkinson, 2017 WL 5289553, at *2–3.

173 See Def.’s Answering Br. at 24–28; Trial Tr. at 147:9–16; id. at 149:22–150:4; Friedt 

Dep. Tr. at 61:24–64:9; Pettry Dep. Tr. at 38:12–22, 40:19–41:22, 75:10–19. 

174 See Calgon Carbon, 2019 WL 479082, at *10 (“Advice from counsel comes in many 

forms. Individual stockholders and smaller institutions cannot be expected to have an 

independent, in-house team to cultivate purely homegrown legal analyses of their 

investments. Stockholders are entitled to hire counsel to review and monitor their 

portfolios for potential mismanagement or wrongdoing. They are also entitled to rely on 

that counsel to raise concerns, to advise them on how to remedy those concerns, and to 

pursue appropriate remedies.”).

175 See Def.’s Answering Br. at 31–33; Trial Tr. at 156:15–158:22.
39

are volunteers.

176 Hollywood works with portfolio monitoring counsel, who raise

potential issues with Hollywood, first by bringing them the attention of Hollywood’s 

outside general counsel.177 If the general counsel determines that the matter is worthy of 

consideration, he elevates the discussion first to the Chairman of the Board and then to 

the Board to make the determination of whether to take action.178 Hollywood followed

its process in this case,

179 and that process is sound. Like boards of Delaware 

corporations,180 boards of pension funds are encouraged to rely on professional advisors 

when fulfilling their duties to act in the best interests of the retirees. Hollywood’s 

reliance on professional advisors, including portfolio monitoring counsel, strengthens the 

integrity of Hollywood’s purpose, not the opposite.

Demonstrating how far Gilead was willing to go in attacking Plaintiffs, Gilead 

tries to impugn Ramirez’s testimony based on a cut-and-paste error in Ramirez’s retainer 

agreement with counsel.181 The error (failing to replace the word “opioid”) was made by 

counsel—not Ramirez.182 Ramirez explained that he was caught by surprise when asked 

about the error at his deposition; the “curveball,” as he called it, confused him because 

 176 See Williams Dep. Tr. at 22:23–23:3, 42:1–11; see also id. at 25:7–9 (“Q. Who at 

Hollywood has decision-making authority with respect to litigation decisions? A. That 

would be the board of trustees.”).

177 Id. at 41:13–21.

178 Id. at 55:11–56:7.

179 See JX-129 at 1; Williams Dep. Tr. 56:8–57:3.

180 See, e.g., 8 Del. C. § 141(e). 

181 See Trial Tr. at 39:21–40:8 (Ramirez). 

182 See id. at 10:19–11:11, 40:16–21 (Ramirez). 
40

this case has nothing to with opioids.183 Ramirez confirmed throughout his deposition 

and trial testimony that his aim in seeking records was true, even stating that he was 

inspired by an article he read related to wrongdoing related to Gilead’s HIV drugs.184 

In the end, Gilead failed to establish that any Plaintiff’s lawyers’ involvement 

undermined any Plaintiff’s purpose (much less all of them). The record reflects that each 

Plaintiff genuinely holds its stated purpose of investigating possible wrongdoing in the 

development and commercialization of Gilead’s HIV treatments. 

B. Gilead’s So-Called “Standing” Arguments

In its second attack on Plaintiffs’ purposes, Gilead argues that “Plaintiffs’ 

Demands are defective because Plaintiffs lack standing to investigate the claimed 

wrongdoing.”185 This is so, according to Gilead, because any derivative claims 

challenging the wrongdoing at issue would be dismissed for the following reasons:

(i) Plaintiffs did not own shares at the time of the alleged wrongdoing;186 (ii) the 

 183 Id. at 13:13–15, 32:5–34:4 (Ramirez). 

184 See id. at 12:23–13:15 (Ramirez); Ramirez Dep. Tr. at 87:15–19, 98:6–7, 119:9–22.

185 Def.’s Answering Br. at 36.

186 See id. at 36 (citing Graulich v. Dell Inc., 2011 WL 1843813, at *5 (Del. Ch. May 16, 

2011) (“If plaintiff would not have standing to bring suit, plaintiff does not have a proper 

purpose to investigate wrongdoing because its stated purpose is not reasonably related to 

its role as a stockholder.”); W. Coast Mgmt. & Cap., LLC v. Carrier Access Corp., 914 

A.2d 636, 641 (Del. Ch. 2006) (“If a books and records demand is to investigate 

wrongdoing and the plaintiff’s sole purpose is to pursue a derivative suit, the plaintiff 

must have standing to pursue the underlying suit[.]”)); id. at 37–38. 
41

derivative claims they seek to pursue are time-barred;187 and (iii) any derivative claims 

they seek to pursue would be barred by an exculpatory charter provision.188 

Gilead devoted extensive resources to this argument. To support it, Gilead served

discovery, brought a motion to compel, and took five depositions. Gilead explored these 

issues at trial and devoted eight pages of post-trial briefing to them.

189 

There are a number of vexing aspects of this argument. For starters, although 

certain of these points may speak to a plaintiff’s standing to pursue a derivative suit, they

do not speak to a plaintiff’s standing to pursue a Section 220 action. Under Delaware 

law, “[t]he issue of standing is concerned ‘only with the question of who is entitled to 

mount a legal challenge and not with the merits of the subject matter in controversy.’”190 

Where the right at issue is statutory, “the real determinant” of standing “is the statutory 

language itself.”191 Section 220(c) answers the question of who has standing to pursue an

 187 See id. at 36 (citing Graulich, 2011 WL 1843813, at *6 (denying Section 220 demand 

where “plaintiff ha[d] articulated no stated purpose other than to investigate wrongdoing 

in order to bring an appropriate suit against defendant, and plaintiff [was] time-barred 

from bringing that suit”)); id. at 39–43.

188 See id. at 43 n.26 (citing Se. Pa. Transp. Auth. v. Abbvie Inc., 2015 WL 1753033, at 

*13 (Del. Ch. Apr. 15, 2015) (investigating corporate wrongdoing and waste were not 

proper purposes when the facts alleged amounted to only a possible breach of the duty of 

care, damages for which would be barred by the corporation’s exculpation clause)).

189 See Trial Tr. at 185:4–190:15; Def.’s Answering Br. at 36–43.

190 Dover Hist. Soc’y v. City of Dover Plan. Comm’n, 838 A.2d 1103, 1110 (Del. 2003) 

(quoting Stuart Kingston, Inc. v. Robinson, 596 A.2d 1378, 1382 (Del. 1991)).

191 Oceanport Indus., Inc. v. Wilm. Stevedores, Inc., 636 A.2d 892, 900 (Del. 1994); 

Newark Landlord Assoc. v. City of Newark, 2003 WL 21448560, at *5 (Del. Ch. June 13, 

2003).
42

enforcement action under Section 220(c)—a stockholder.192 In this case, it is undisputed 

that each Plaintiff held stock when filing their complaints (and also for significant periods

prior to filing the complaints).

193

Gilead’s arguments speak not to Plaintiffs’ standing to pursue a Section 220 action 

but, rather, to the viability of derivative claims that Plaintiffs might pursue in the future. 

“This Court has repeatedly stated that a Section 220 proceeding does not warrant a trial 

on the merits of underlying claims.”194 Yet Gilead pushes the court do just that—

 192 See 8 Del. C. § 220(c) (providing that “[i]f the corporation . . . refuses to permit an 

inspection sought by a stockholder . . . the stockholder may apply to the Court of 

Chancery for an order to compel such inspection” (emphasis added)); see also

Weingarten v. Monster Worldwide, Inc., 2017 WL 752179, at *5 (Del. Ch. Feb. 27, 2017) 

(“[T]he legislature has made clear that only those who are stockholders at the time of 

filing have standing to invoke this Court’s assistance under Section 220.”).

193 Collins has held Gilead stock since 1999, except for a five-month period in 2008. JX52. Friedt has held Gilead stock since 2013. See JX-157 at 9; Friedt Dep. Tr. at 31:15–

19, 38:13–22. Pettry has held Gilead stock since 2016. See JX-155 at 9; Pettry Dep. Tr. 

at 43:7–16. Ramirez has held Gilead stock since 2016. See JX-46; Ramirez Dep. Tr. at 

27:3–15. Hollywood has held Gilead stock since 2010. JX-161 at 9. 

194 In re UnitedHealth Gp., Inc. Section 220 Litig., 2018 WL 1110849, at *7 & n.95 (Del. 

Ch. Feb. 28, 2018) (Montgomery-Reeves, V.C.) (collecting cases); see also Lavin, 2017 

WL 6728702, at *9 (Slights, V.C.) (holding that a Corwin defense will not impede an 

otherwise properly supported demand for inspection and observing that “when a 

stockholder demands inspection as a means to investigate wrongdoing in contemplation 

of a class or derivative action, Delaware courts generally do not evaluate the viability of 

the demand based on the likelihood that the stockholder will succeed in a plenary 

action”); Amalgamated Bank v. UICI, 2005 WL 1377432, *2 (Del. Ch. June 2, 2005)

(Noble, V.C.) (“The potential availability of affirmative defenses to withstand fiduciary 

duty claims cannot solely act to bar a plaintiff under Section 220. First, these are 

summary proceedings; the factual development necessary to assess fairly the merits of a 

time-bar affirmative defense, for example, as to each potential claim, is not consistent 

with the statutory purpose. Second, courts should not be called upon to evaluate the 

viability of affirmative defenses to causes of actions that have not been, and more 

importantly may not ever be, asserted. Third, that a claim arising out of a particular 
43

evaluate, in the context of a summary proceeding, defenses to causes of action that have 

not yet been asserted and might have never been asserted. 

Beyond the obvious practical concerns raised by such an approach, the theoretical 

problems with Gilead’s argument are rife, as Vice Chancellor Laster persuasively 

explained in AmerisourceBergen.

195 As the court held in AmerisourceBergen, a defense

to a future derivative claim affects a stockholder’s ability to invoke Section 220 only 

where the stockholder identifies pursuing a derivative claim as its sole purpose, as was 

the case in Graulich and West Coast Management.

196 In this case, Plaintiffs did not limit 

 

transaction may be barred does not mandate the conclusion that documents relating to 

that transaction are not ‘necessary, essential, and sufficient’ for a shareholder's proper 

purpose with respect to more recent transactions.”); LAMPERS, 2007 WL 2896540, at 

*12 (Noble, V.C.) (rejecting, in a Section 220 proceeding, that no springloading ever 

occurred because “by raising such a defense, Countrywide seeks to litigate the ultimate 

issue in a possible future derivative suit that might eventually be filed by LAMPERS” 

and holding that “[t]his is neither the time nor the procedural setting to address that 

issue”). 

195 See AmerisourceBergen, 2020 WL 132752, at *14–24; see also Okla. Firefighters 

Pension & Ret. Sys. v. Citigroup Inc., 2014 WL 5351345, at *6 (Del. Ch. Sept. 30, 2014) 

(“Although Citigroup disclaims any effort to turn this proceeding into a trial on the merits 

of Plaintiffs possible derivative claims, Citigroup essentially seeks that result by implying 

that Plaintiff must have specific, tangible evidence that Citigroup’s Board or senior 

management was complicit in the fraud at Banamex. That argument ignores the 

inferences that this Court can—and must—draw under the credible basis standard, and 

would discourage the very behavior this Court has sought to encourage among would-be 

derivative or class plaintiffs.”).

196 See Graulich, 2011 WL 1843813, at *5 (“[P]laintiff’s only purpose is to pursue 

potential derivative claims.” (emphasis added)); W. Coast Mgmt., 914 A.2d at 641 (“It is 

clear that West Coast’s sole purpose for investigating claims of wrongdoing is to obtain 

additional information to replead demand futility in order to pursue a second derivative 

suit.” (emphasis added)). To be clear, a Section 220 plaintiff is not required to limit the 

end-uses of the information they seek at the outset of their investigation. 

AmerisourceBergen 2020 WL 132752, at *12 (holding that the proper purpose 
44

themselves to the sole purpose of pursuing derivative claims.197 Rather, Plaintiffs 

expressly identified multiple potential end-uses for the information obtained through their 

investigations.

198 

Gilead acknowledges that Plaintiffs have stated multiple potential end-uses for the 

information obtained through their investigations,

199 but Gilead pivots to argue that “it is 

obvious based on Plaintiffs’ [i] deposition testimony, coupled with their [ii] retention 

agreements, that their only true purpose is to pursue such a lawsuit.”200 

A review of Plaintiffs’ testimony and a close examination of Gilead’s citations 

reveal that Gilead’s position is unsupported and its citations are misleading. As an initial 

 

requirement does not require a stockholder to pick one of these end-uses at the outset, or 

“commit in advance to what it will do with an investigation before seeing the results of 

the investigation”).

197 See Def.’s Answering Br. at 37 (acknowledging that “Plaintiffs claim that their 

purposes ‘are not limited to bringing a derivative lawsuit’” (citing Pls.’ Opening Br. at 

46)); JX-123 at 2 (Ramirez’s demand stating that if the investigation supports doing so, 

he “may use the documents to pursue a shareholder derivative action” (emphasis added)); 

JX-128 at 15 (Collins’s demand stating that the information sought will enable him “to 

determine whether wrongdoing or mismanagement has taken place such that it would be 

appropriate to initiate litigation”); JX-108 at 1 (Pettry’s demand listing “presenting a 

litigation demand to the Board” or “suggesting corporate governance reforms” as other 

potential end uses of the fruits of their investigation); JX-113 at 1 (Friedt’s demand 

listing “presenting a litigation demand to the Board” or “suggesting corporate governance 

reforms” as other potential end uses of the fruits of their investigation); JX-124 at 1 

(Hollywood’s demand expressly stating that Hollywood reserves the right to “take other 

action to seek appropriate relief”).

198 See Pls.’ Opening Br. at 25–45.

199 See Def.’s Answering Br. at 37 (acknowledging that “Plaintiffs claim that their 

purposes ‘are not limited to bringing a derivative lawsuit’” (citing Pls.’ Opening Br. at 

46)).

200 Id. (emphasis added).
45

matter, although Gilead makes this point as to “Plaintiffs” as a whole, Gilead does not 

cite to any deposition testimony from one of the five Plaintiffs—Hollywood.201 Nor 

could they. Hollywood’s 30(b)(6) representative Williams testified that he had not 

predetermined what would happen after the investigation.202 Williams, a retired police 

officer, expressly likened a Section 220 inspection to a police investigation, and stated 

that “[t]his is simply an investigation. If it turns out that there is no [wrongdoing], then it 

will be the end of it.”203 Gilead can only avoid inspection if it defeats all five Plaintiffs’ 

proper purposes. By failing to show that Hollywood had predetermined what to do with 

the fruits of its investigation, Gilead’s argument falls short from the get-go.

Gilead’s other citations amount to misrepresentations of the record. For the 

position that it is “obvious” from “Plaintiffs’ deposition testimony” that Plaintiffs’ “only 

true purpose” was to pursue derivative claims, Gilead offers the following: 

• Gilead cites to the portion of Collins’s testimony where Collins directly 

denies any plans to file a derivative claim.204 The examining attorney 

asked: “Do you intend to file a derivative action against Gilead?” Collins 

 201 See id. at 36–43.

202 See Williams Dep. Tr. at 58:1–10 (“Well, as I understand it, it’s similar to a police 

investigation, if you will. If there is some wrongdoing that's being alleged, there’s an 

investigation that follows. That investigation may turn out to be completely prudent. 

Any and all the action taken was in the best interests of the company. And as I stated 

before, if there’s nothing there, then we move on. If it turns out that there’s wrongdoing, 

then the matter would be brought back to the board for any other consideration.”).

203 Id. 52:1–3; see also id. at 51:10–17 (“Q. And when you say ‘the action,’ what do you 

mean by that? A. The books and records investigation involving Gilead. Q. Has 

Hollywood considered bringing a derivative lawsuit related to the allegations in the 

Section 220 demand letter? A. No.”).

204 Def.’s Answering Br. at 37 (citing Collins Dep. Tr. at 103–05).
46

responded: “I don’t have any plans to do that at the moment.”205 The 

attorney continued: “Are you aware of any other Gilead stockholders who 

are contemplating bringing a derivative action against Gilead?” He 

responded: “No, I’m not.”206 

• Gilead cites to the portion of Pettry’s testimony where she directly denies 

that her purpose is limited to pursuing a derivative claim.207 The examining 

attorney asked: “Now, at the time you entered into this engagement 

agreement [with counsel], did you intend to file derivative litigation 

relating to Gilead?” Pettry answered: “It was a matter of first finding out. 

I mean, obviously, although it’s potentially a shareholder derivative matter, 

clearly there was first to do inspection demand to get information in order 

to determine whether it’s appropriate to file derivative, shareholder 

litigation.”208

• Gilead cites to the portion of Ramirez’s deposition transcript where 

Ramirez uses equivocal language when referring to a future derivative 

lawsuit.209 Counsel for the defendants identified each category of 

documents requested in Ramirez’s demand and asked: “[F]or what purpose 

do you need this information?”210 In response to the first few such 

questions, Ramirez vaguely indicated that he believed that the information 

would strengthen his “case.”211 In response to the last such question, 

Ramirez went further to say that he believed the information would 

strengthen the allegations for the purpose of a potential lawsuit, but he used 

conditional language, stating: “if there is a case to be brought.”212 The 

 205 Collins Dep. Tr. at 104:19–23.

206 Id. at 105:1–4.

207 Def.’s Answering Br. at 37 (citing Pettry Dep. Tr. at 64–65).

208 Pettry Dep. Tr. at 64:23–65:8 (emphasis added).

209 Def.’s Answering Br. at 37 (citing Ramirez Dep. Tr. at 102–12).

210 Ramirez Dep. Tr. at 107:21–22, 108:19–20, 110:1–2. 

211 See id. at 108:3–5 (“I think they could help strengthen our case against the 

allegations.”); id. at 109:15–17 (“As I had previously stated, I believe they could shed 

some light and strengthen our case.”); id. at 110:15–17 (“I would again say adding merit 

and strength to the allegations that were present . . . for all the points as like a 

collective.”).

212 Id. at 111:18–21 (emphasis added) (“[A]s previously stated, these conversations could 

add merit and strength to our allegations, if there is to be a case brought.”).
47

reference to a “case to be brought” called for a follow-up question, which 

counsel eventually asked: “What specific case are you talking about.”213 

Ramirez responded by claiming privilege, but again using conditional 

language: “I think any of the discussions about any potential case, if there 

is to be one, were between my counsel and I. So I don’t know if I can 

properly answer that for you.”214 The examining attorney let the 

questioning end there.215 

• Gilead cites to the portions of Friedt’s testimony where Friedt suggests that 

she will rely on her counsel in determining the end-uses of her 

investigation.216 The lead-off question in this series, which the examiner 

insisted required a “yes or no” response, was: “[H]ave you informed 

Gilead that you may file a derivative action against it?”217 To this question, 

Friedt responded “[t]hrough counsel, yes,” and then said “I left it up to my 

counsel to inform Gilead.”218 The examiner had not previously asked 

whether Friedt had considered filing a derivative claim, and thus the 

question assumed aspects of the very fact that Gilead seeks to prove—

Friedt’s intent to pursue derivative claims. Moreover, on its face, this 

examiner’s question only asks whether Friedt “may” file a derivative 

action, and not that she has predetermined that a derivative claim is the only 

end-use she intended to pursue. Friedt later clarified, in other pages 

specifically relied on by Gilead, that she intended to leave it to her counsel 

to determine whether to pursue derivative claims, implicitly denying any 

then-present intention of pursuing derivative claims.219

This deposition testimony does not support, and portions directly contradict,

Gilead’s contention that Plaintiffs’ “only true purpose” is to pursue a derivative lawsuit.

 213 Id. at 112:14–15.

214 Id. at 112:16–20 (emphasis added).

215 See id.

216 Def.’s Answering Br. at 37 (citing Friedt Dep. Tr. at 54–56).

217 Friedt Dep. Tr. at 54:1–5. 

218 Id. at 54:9–15. 

219 Id. at 81:4–9 (“Q. At the time you entered into this engagement agreement, did you 

intend to file a derivative action relating to Gilead . . . ? A. . . . I would leave that up to 

my counsel.”).
48

Plaintiffs’ retention agreements with counsel similarly fail to demonstrate that 

Plaintiffs’ sole purpose was to pursue a derivative suit. Gilead argues that “the retention 

agreements make clear that counsel will not be paid until Plaintiffs achieve a financial 

settlement or judgment—an implausible scenario absent the prosecution of derivative 

claims.”220 Once again, Gilead fails to make this point as to all Plaintiffs—only four of 

the five Plaintiffs executed retention agreements with counsel.221 Collins represented that 

he did not have a retention agreement with counsel.222 

It is true that plaintiffs’ attorneys commonly take matters on contingency and 

receive compensation only as a consequence of the prosecution and settlement of 

derivative claims. This common arrangement is, again, a benign aspect of Delaware’s

solution to the collective action problem that stockholders face. Moreover, the fact that 

retention agreements with counsel provide that counsel only gets paid in the event of 

plenary litigation does not prevent Plaintiffs from using “the fruits of their investigation 

for other ends.”223 It is logical that the agreements would address litigation because

“[t]he plaintiffs would need their counsel to conduct litigation,” but not to pursue 

 220 Def.’s Opening Br. at 37 (citing JX-79 at 2 (Friedt Retention Agreement); JX-80 at 2 

(Pettry Retention Agreement); JX-87 at 1–2 (Ramirez Retention Agreement); JX-122 at 2 

(Hollywood Retention Agreement)).

221 See JX-79 (Friedt Retention Agreement); JX-80 (Pettry Retention Agreement); JX-87 

(Ramirez Retention Agreement); JX-122 (Hollywood Retention Agreement).

222 Collins Dep. Tr. at 45:19–24. 

223 See AmerisourceBergen, 2020 WL 132752 at *14.
49

alternative courses of action.224 The retention agreements standing alone, therefore, do 

not undermine Plaintiffs’ proper purposes.

To sum up the defects in Gilead’s so-called “standing” arguments as a whole: 

They are not actually about standing to bring a Section 220 action. They speak to the 

viability of a derivative claim, which is largely beyond the scope of Section 220 

proceedings. Even the authorities on which Gilead relies limit the application of Gilead’s 

arguments to situations where pursuing a derivative claim is the plaintiff’s sole purpose. 

Section 220 plaintiffs generally need not specify the end-uses of their investigation at the 

outset of their investigation, and Plaintiffs here have stated multiple potential end-uses. 

Gilead’s arguments to the contrary based on Plaintiffs’ deposition testimony fail to 

address all Plaintiffs and are misleading. Plaintiffs’ retention agreements with their 

counsel do not support Gilead’s point. 

Gilead’s arguments fail for other reasons as well. Gilead argues that Plaintiffs 

lack standing to seek inspection because Plaintiffs did not own shares at the time of the 

possible wrongdoing.225 Yet, in Saito, the Delaware Supreme Court found that “the date 

on which a stockholder first acquired the corporation’s stock does not control the scope 

 224 Id.

225 See Def.’s Answering Br. at 36 (citing Graulich, 2011 WL 1843813, at *5 (“If 

plaintiff would not have standing to bring suit, plaintiff does not have a proper purpose to 

investigate wrongdoing because its stated purpose is not reasonably related to its role as a 

stockholder.”)); W. Coast Mgmt., 914 A.2d at 641 (“If a books and records demand is to 

investigate wrongdoing and the plaintiff’s sole purpose is to pursue a derivative suit, the 

plaintiff must have standing to pursue the underlying suit[.]”)). 
50

of records available under § 220.”226 As the court explained, a stockholder can seek 

inspection of records pre-dating their stock ownership “[i]f activities that occurred before 

the purchase date are ‘reasonably related’ to the stockholder’s interest as a 

stockholder.”227 A document can reasonably relate to a stockholder’s current interests if 

it provides background and context to the current or ongoing wrong the stockholder seeks 

to investigate.228 In this case, any records sought that arguably pre-date Plaintiffs’ 

ownership of Gilead stock are “reasonably related” to Plaintiffs’ current interest as 

stockholders, and concern post-purchase date wrongs that have their roots in earlier 

events. 

In any event, Gilead’s timing-of-ownership argument does not apply to the ongoing False Claim Acts investigations, and the antitrust abuses, mass torts, and patent 

violations are all alleged to be continuing.

229 

There is also a non-frivolous argument that Gilead waived its statute of limitations 

and Section 102(b)(7) defenses by failing to identify them in its interrogatory responses, 

despite this court ordering discovery into Gilead’s defenses.230 Gilead responds that it 

 226 Saito v. McKesson HBOC, Inc., 806 A.2d 113, 117 (Del. 2002).

227 Id.

228 UICI, 2005 WL 1377432, at *2 (“A document that contributes to the investigation of a 

continuing wrong or provides background and context to a current, actionable wrong may 

be relevant and, indeed, necessary to a shareholder’s proper purpose regardless of 

whether the events revealed in the documents are themselves actionable.”).

229 See JX-82 at ¶ 2; JX-98 at 3, 69–75; JX-244 at ¶¶ 155, 163.

230 See JX-164; JX-191; JX-206; JX-210; see also IQ Hldgs., Inc. v. Am. Com. Lines Inc., 

2012 WL 3877790, *1 (Del. Ch. Aug. 30, 2012) (“The underlying purpose of discovery 
51

was not required to raise these defenses in its answer or otherwise because they are not 

defenses to a books and records action but, rather, to the plenary lawsuit.231 This

decision need not reach this argument given the multiple other defects in Gilead’s 

position. But it bears noting that Gilead’s position only underscores that Gilead’s 

“standing” arguments speak to the viability of a potential derivative claim and not 

Plaintiffs’ entitlement to inspection under Section 220.

C. Scope of Production

Once a Section 220 plaintiff establishes a proper purpose, the court must 

determine the scope of inspection. A stockholder with a proper purpose “bears the 

burden of proving that each category of books and records is essential to accomplishment 

of the stockholder's articulated purpose for the inspection.”232 

The Delaware Supreme Court recently articulated this burden as follows:

Books and records satisfy this standard “if they address the 

‘crux of the shareholder’s purpose’ and if that information ‘is 

unavailable from another source.’” That determination is 

“fact specific and will necessarily depend on the context in 

which the shareholder’s inspection demand arises.” Keeping 

in mind that § 220 inspections are not tantamount to 

“comprehensive discovery,” the Court of Chancery must 

tailor its order for inspection to cover only those books and 

records that are “essential and sufficient to the stockholder's 

stated purpose.” In other words, the court must give the 

 

in general is to reduce the element of surprise at trial . . . .”). 

231 See Def.’s Answering Br. at 40 n.23 (“The statute of limitations is not an affirmative 

defense in a books and records action.”). 

232 Palantir, 203 A.3d at 751 (quoting Thomas & Betts, 681 A.2d at 1035).
52

petitioner everything that is “essential,” but stop at what is 

“sufficient.”233

In this case, Plaintiffs seek inspection of formal board materials, including board 

minutes, presentations, reports, agendas, and preparation materials, dating back to 2004 

and concerning the topics of the Demands. Plaintiffs additionally seek five specific 

categories of documents.

Gilead’s response is three-fold. Gilead first argues that inspection should be 

limited to formal board materials. Gilead next makes arguments as to each category of 

additional documents. Gilead finally argues that each Plaintiff should be limited to 

inspecting only the documents specifically sought in their respective Demands. 

1. Formal Board Materials

Gilead agrees that, upon a finding that Plaintiffs have stated proper purposes, the 

production of the formal board materials is appropriate.

234 Gilead has collected and 

reviewed approximately 1,600 centrally-stored formal board materials from December 1, 

2004 to February 25, 2020, and identified over 400 of them as potentially related to the 

topics sought in the Demands.235 Because Plaintiffs have stated proper purposes, 

Plaintiffs are entitled to inspect this category of documents. These documents should 

have been produced in response to the Demands without resort to litigation.

 233 Id. at 751–52.

234 Def.’s Answering Br. at 47–50.

235 JX-210 at 21–23.
53

2. Categories of Additional Documents

Gilead argues that the court should limit inspection to the formal board materials 

based on what Gilead describes as the “default rule that only formal board materials are 

necessary and essential in a Section 220 proceeding.”236 There is no such default rule.

Gilead relies primarily on Vice Chancellor Laster’s decision in 

AmerisourceBergen.

237 There, the Vice Chancellor classified corporate books and 

records into three categories: “Formal Board Materials,”238 “Informal Board 

Materials,”239 and “Officer-Level Materials.”240 The Vice Chancellor explained that 

“[t]he starting point (and often the ending point) for an adequate inspection will be boardlevel documents.”241 The premise for that observation is that companies can and should 

provide these documents voluntarily without forcing stockholders to litigate over them. 

 236 Def.’s Answering Br. at 54.

237 See id.

238 AmerisourceBergen, 2020 WL 132752 at *24 (defining “Formal Board Materials” as 

“board-level documents that formally evidence the directors’ deliberations and decisions 

and comprise the materials that the directors formally received and considered”) 

(collecting cases limiting the scope of production to Formal Board Material); see also 

Woods v. Sahara Enters., 2020 WL 4200131, at *11 (Del. Ch. July 22, 2020) (same).

239 AmerisourceBergen, 2020 WL 132752 at *25 (defining “Informal Board Materials” as 

“generally include[ing] communications between directors and the corporation’s officers 

and senior employees, such as information distributed to the directors outside of formal 

channels, in between formal meetings, or in connection with other types of board

gatherings” and sometimes including “emails and other types of communication sent 

among the directors themselves, even if the directors used non-corporate accounts”).

240 Id. (defining “Officer Level Materials” as “communications and materials that were 

only shared among or reviewed by officers and employees”).

241 Id. at *24. 
54

Gilead misses this point and invokes the AmerisourceBergen taxonomy for a contrary 

purpose—to broaden the already extensive disputes among the parties.

Formal board materials need not be an end point, particularly where the 

wrongdoing appears vast. As the Vice Chancellor further explained in 

AmerisourceBergen, “[i]f the plaintiff makes a proper showing, an inspection may extend 

to informal materials,”242 and “wide-ranging mismanagement or waste” might require a 

“more wide-ranging inspection.”243 In this case, Gilead’s efforts to draw the line at 

formal board materials fall short because Plaintiffs have shown a need for additional 

categories of documents by demonstrating a credible basis to suspect wide-ranging 

misconduct and wrongdoing.

In addition to formal board materials, Plaintiffs seek the following categories of 

documents: (a) the agreements with other companies at issue in the antitrust litigation;

(b) policies and procedures concerning the topics covered in the Demands; (c) senior 

management materials; (d) communications between Gilead and the government; and (e) 

director questionnaires.

 242 Id. at *25.

243 Id. at *24 (first quoting Freund v. Lucent Techs., Inc., 2003 WL 139766, at *5 (Del. 

Ch. Jan. 9, 2003); then citing Skoglund v. Ormand Indus., 372 A.2d 204, 211 (Del. Ch. 

1976)). 
55

a. Anticompetitive Agreements

Plaintiffs seek to inspect the agreements between Gilead and its competitors at 

issue in the antitrust litigation.244 Plaintiffs suspect that these agreements violated 

antitrust laws or otherwise perpetuate unlawful anticompetitive activity.

245 They are core 

to the wrongdoing Plaintiffs seek to investigate.246 They are therefore necessary and 

essential to Plaintiffs’ proper purposes. They are unlikely to be available from another 

source. Accordingly, Plaintiffs are entitled to inspect this category of documents.247 

Because of the centrality of these agreements to Plaintiffs’ purposes, Gilead should have 

produced them without resorting to litigation.

 244 Pls.’ Opening Br. at 56–57.

245 Id.

246 See, e.g., AmerisourceBergen, 2020 WL 132752, at *28 (ordering inspection of 

settlement agreements with the DEA to identify the scope of the company’s compliance 

obligations and determine whether the Board willfully disregarded them).

247 The parties dispute the significance of AmerisourceBergen on this category of 

documents. In that case, the court ordered inspection of documents related to the 

defendant’s participation in trade associations where the plaintiffs suspected that the 

defendant violated the law by collaborating with trade associations. See id. Plaintiffs 

argue that this outcome weighs in favor of production of the antitrust agreements in this 

action. Pls.’ Opening Br. at 57 n.191. Gilead responds that the Court limited production 

in AmerisourceBergen to formal board materials, and argues that this court should 

“follow AmerisourceBergen and not order the production of the underlying antitrust 

agreements.” Def.’s Answering Br. at 53. Defendant misconstrues AmerisourceBergen,

where the Court found that “[t]he record is inadequate to determine whether the plaintiffs 

can inspect any other materials because AmerisourceBergen refused to provide any 

discovery into what types of books and records exist, how they are maintained, and who 

has them.” See 2020 WL 132752, at *1. The court expressly granted the plaintiffs the 

ability to seek further discovery to determine what books and records exist. See id. at 

*29. Here, Plaintiffs obtained that discovery, so there is no need for bifurcation.
56

In holding that Plaintiffs are entitled to inspect the allegedly anticompetitive 

agreements, the court does not distinguish between the Gilead/Japan Tobacco agreement 

and those still at issue in the Staley Action. The complete set of agreements is necessary 

to understanding the pattern of behavior that the Demands seek to investigate. 

b. Policies and Procedures

Plaintiffs seek to inspect Gilead’s policies and procedures concerning Gilead’s 

compliance with antitrust regulations and patent law.248 These requests seek discrete

categories of information, which are easy to produce, and where inspection is routinely 

granted.249 Gilead argues that the formal board materials from the relevant time period 

are sufficient to understand whether Board and management decisions were made in 

compliance with Gilead’s policies and procedures.250 But the formal board materials may 

not reflect what, if any, policies and procedures were in place during that time period. 

These documents are therefore necessary and essential to Plaintiffs’ proper purposes. 

They are unlikely to be available from another source. Accordingly, Plaintiffs are 

 248 Pls.’ Opening Br. at 57.

249 See, e.g., AmerisourceBergen, 2020 WL 132752, at *27 (ordering production of the 

Amerisourcebergen’s written policies regarding its anti-diversion and compliance 

program); In re Facebook, Inc. Section 220 Litig. (Facebook 220), 2019 WL 2320842, at 

*18 (Del. Ch. May 30, 2019) (ordering the production of Facebook’s formally adopted 

policies and procedures regarding data privacy and access to user data, including those 

promulgated following the entry of the Consent Decree); UnitedHealth, 2018 

WL 1110849, at *10 (ordering the production of UnitedHealth’s policies and procedures 

regarding Medicare billing); Lucent, 2003 WL 139766, at *6 (ordering production of 

policies and procedures concerning accounting compliance, including policies for (i) 

preparing revenue “targets” or preparing and disclosing “financial guidance” or 

projections; and (ii) recognizing revenue, on sales to its distributors).

250 Def.’s Answering Br. at 53–54. 
57

entitled to inspect this category of documents. This is another category of documents that 

Gilead should have produced without resorting to litigation.

c. Senior Management Materials

Plaintiffs seek to inspect two categories of officer-level documents that they refer 

to as “Senior Management Materials” to determine “whether and to what extent 

mismanagement occurred and what information was transmitted to Gilead’s directors and 

officers.”251 

This court will permit inspection of officer-level documents under certain 

circumstances. As the Delaware Supreme Court described in Saito when affirming 

inspection of officer-level documents, “generally, the source of the documents in a 

corporation’s possession should not control a stockholder's right to inspection under 

§ 220.”252 Although inspection of officer-level documents can be appropriate, in general, 

“the Court of Chancery should not order emails to be produced when other materials 

(e.g., traditional board-level materials, such as minutes) would accomplish the 

petitioner’s proper purpose, but if non-email books and records are insufficient, then the 

court should order emails to be produced.”253 The burden lies on Plaintiffs to establish a 

reasonable basis to suspect that other materials are likely to be insufficient to accomplish 

the stockholder’s proper purpose.

 251 Pls.’ Opening Br. at 60–62.

252 Saito, 806 A.2d at 118; accord. Wal-Mart Stores, Inc., 95 A.3d at 1273; see also 

Woods, 2020 WL 4200131, at *11; Mudrick Cap. Mgmt., L.P. v. Globalstar, Inc., 2018 

WL 3625680, at *9 (Del. Ch. July 30, 2018).

253 Palantir, 203 A.3d at 752–53.
58

First, Plaintiffs seek approximately thirty sets of materials emailed to senior 

management members prior to their bi-monthly “Leadership Team Meetings” and ad hoc 

meetings.254 Plaintiffs observe that Gilead stores the materials circulated in connection 

with the bi-monthly meetings in a centralized location.255 Plaintiffs contend that these 

materials are likely to include information about the government investigations, the 

antitrust lawsuits, and Gilead’s decision to sue the U.S. government.256 These thirty sets 

are necessary and essential to Plaintiffs’ ability to investigate whether and to what extent 

wrongdoing occurred and what information was transmitted to Gilead’s directors and 

officers.257 They are also unlikely to be available from another source. Accordingly, 

Plaintiffs are entitled to inspect this category of documents.

Second, Plaintiffs request electronically stored information—previously gathered 

and produced in connection with the congressional investigation, the Staley Action, and a 

2016 subpoena—from the files of two former inside directors John Milligan and John 

Martin.

258 Plaintiffs say that Milligan and Martin were highly influential Board members 

 254 Trial Tr. at 87:7–21; JX-210 at 26, 39.

255 See Pls.’ Opening Br. at 62 & n.204; see also JX-210 at 40 (“From June 2019 to 

present, documents may be accessed via OneDrive and projected for shared viewing.”). 

256 Pls.’ Opening Br. at 60–62.

257 Cf. Facebook 220, 2019 WL 2320842, at *18 (ordering the production of “electronic 

communications, if coming from, directed to or copied to a member of the Board, 

concerning” the plaintiffs’ allegations in that case, “to be collected from the following 

[senior management] custodians: Erskine B. Bowles, Sheryl Sandberg, Alex Stamos, and 

Mark Zuckerberg”). 

258 Pls.’ Opening Br. at 61–62; see also JX-210 at 27 n.4 (alleging that Milligan and 

Martin, as former executives, were “custodians in certain Matters by virtue of their roles 
59

and thus their documents are critical because any wrongdoing will likely involve what 

these Board members knew.259 As to this one category, Plaintiffs’ efforts fall short. A 

director’s status as a management member or highly influential Board member can 

sometimes provide a basis for inspecting that director’s emails, typically where the 

director played a key role in the suspected wrongdoing.

260 The mere fact that a director 

holds a management position or is influential seldom makes their documents necessary 

and essential to investigating wrongdoing.261 In this case, Plaintiffs offer no additional 

justification for seeking to inspect these documents. Plaintiffs have therefore failed to 

demonstrate that these emails are necessary and essential to their stated purposes and are 

not entitled to inspect this category of documents.

d. Gilead’s Communications with the Government

Plaintiffs seek to inspect high-level communications between Gilead and 

government investigators that state the basis for the ongoing government 

investigations.262 This court regularly orders companies to produce communications 

 

as Senior Officers).

259 Pls.’ Post-Trial Opening Br. at 61–62.

260 See, e.g., Yahoo!, 132 A.3d at 791–793 (permitting inspection of CEO’s “email and 

other electronic documents” because she “was the principal corporate actor in the hiring 

process”).

261 Cf. Kaufman v. CA, Inc. (Kaufman II), 905 A.2d 749, 755 (Del. Ch. 2006) (holding 

that the plaintiff “conflate[d] the usefulness or responsiveness of further discovery . . . 

with the proper standard of necessity under Section 220” and “[t]hat a document would 

be potentially discoverable under Rule 34 does not make it necessary and essential under 

Section 220”).

262 Pls.’ Opening Br. at 58–60.
60

related to government investigations and litigation in Section 220 cases where those 

investigations supply or support a credible basis for wrongdoing.

263

Just as Gilead’s policies and procedures are necessary and essential to reveal the 

degree of Gilead’s compliance with internal rules, these documents are necessary and 

essential to reveal the degree of Gilead’s compliance with positive law and government 

regulations. Considering that the ongoing government investigations supported 

Plaintiffs’ credible basis for inspection, these documents are necessary and essential to 

assess whether wrongdoing occurred. These communications might also inform whether 

the Company has taken any steps to address the possible wrongdoing. Ongoing 

government investigations might threaten Gilead’s ability to secure future government 

funding, which would present a serious problem for Gilead’s business. 

These documents are therefore necessary and essential to Plaintiffs’ proper 

purposes. They are also unlikely to be available from another source. Accordingly, 

Plaintiffs are entitled to inspect this category of documents.

 263 See, e.g., Facebook 220, 2019 WL 2320842, at *18 (ordering production of documents 

and communications related to “investigations conducted by the FTC, DOJ, SEC, FBI 

and ICO regarding Facebook’s data privacy practices”); China MediaExpress, 2012 

WL 28818, at *6 (ordering production of any materials provided to the United States 

Patent Office or any patent office in any other country, including the People's Republic of 

China); Lucent, 2003 WL 139766, at *5 (ordering production of “[o]rders and other 

communications with the SEC concerning its investigation”); Carapico, 791 A.2d at 792 

(ordering production of “reports presented to or minutes of meetings of the Exchange 

Board of Governors (or any committees or subgroups thereof) relating to (a) the SEC 

inquiry, (b) the decision to authorize the settlement of the SEC inquiry, or (c) the impact 

of the terms of the SEC Order on the business of the Exchange or any of its 

subsidiaries”); see also AmerisourceBergen, 2020 WL 132752, at *25 (“In an appropriate 

case, an inspection may extend further to encompass communications and materials that 

were only shared among or reviewed by officers and employees . . . .”).
61

e. Director Questionnaires

Plaintiffs seek to inspect the directors’ and officers’ questionnaires for each Board 

member.264 This court regularly orders companies to produce director questionnaires 

where a plaintiff has demonstrated a credible basis to suspect possible wrongdoing.

265

Because that the Demands investigate alleged violations of positive law and 

government regulations, understanding the directors’ motives and potential conflicts is 

paramount. Further, the burden on Gilead in producing these documents is minimal. 

Gilead stores these documents in a central location,

266 so they are easy to locate and 

produce. They are unlikely to be available from another source. Accordingly, Plaintiffs 

are entitled to inspect this category of documents.

3. Plaintiff-Specific Restrictions on Inspection

Gilead seeks to limit the scope of each Plaintiffs’ inspections to the documents 

requested in their respective Demands.267 Gilead argues that if a Plaintiff elected not to 

request a certain category of documents in its Demand, then it conceded that such 

 264 Pls.’ Opening Br. at 56.

265 See, e.g., Facebook 220, 2019 WL 2320842, at *18 (ordering defendant to produce 

director questionnaires); UnitedHealth, 2018 WL 1110849, at *9 (same); Lavin, 2017 

WL 6728702, at *14 (same). Often, a stockholder will assert the desire to investigate 

director independence as a separate purpose for seeking books and records. See, e.g., 

Facebook 220, 2019 WL 2320842, at *1 (one of the plaintiffs’ stated purposes was to 

investigate the independence and disinterest of the board); UnitedHealth, 2018 

WL 1110849, at *1 (Del. Ch. Feb. 28, 2018) (same); Lavin, 2017 WL 6728702, at *1 

(Del. Ch. Dec. 29, 2017) (same). In this case, Plaintiffs desire to investigating director 

independence is a component of investigating the corporate wrongdoing at issue.

266 JX-210 at 24 n.2.

267 See Def.’s Answering Br. at 45–46.
62

category of information is nonessential to its stated purpose. Gilead contends that 

Plaintiffs may not by piggyback on other stockholders’ separate Demands.

268

As a general rule, a stockholder’s inspection rights are limited by the scope of the 

demand letter, and a Section 220 plaintiff will be foreclosed from recasting the scope of 

its demand at the eleventh hour.269 The conventional wisdom underlying this rule is that 

it is difficult and inefficient for companies to consider the merits of an evolving request. 

Preventing Section 220 plaintiffs from revising the scope of their demands during 

litigation promotes the policy of protecting corporations from the burden and additional 

costs created by these inefficiencies.270 

 268 Id. at 46 (first citing Paraflon Invs., Ltd. v. Linkable Networks, Inc., 2020 WL 

1655947, at *6 (Del. Ch. Apr. 3, 2020) (refusing to order production of documents not 

requested in demand); then citing Fuchs Fam. Tr. v. Parker Drilling Co., 2015 WL 

1036106, at *4, *7 (Del. Ch. Mar. 4, 2015) (rejecting a Section 220 plaintiff’s late-stage 

attempts to expands its inspection)). 

269 See, e.g., Fuchs, 2015 WL 1036106, at *4 (rejecting a Section 220 plaintiff’s efforts to 

expand the scope of requested documents through a supplemental demand sent on the eve 

of trial); Quantum Tech. P’rs IV, L.P. v. Ploom, Inc., 2014 WL 2156622, at *14 n.118 

(Del. Ch. May 14, 2014) (“I note, however, that if Quantum later seeks to inspect 

information that is not within the categories of information sought in this action, 

Quantum would need to make a new demand and, if necessary, file a new action.”); 

Highland Select Equity Fund, L.P. v. Motient Corp., 906 A.2d 156, 167 (Del. Ch. 2006), 

and aff’d sub nom. Highland Equity Fund, L.P. v. Motient Corp., 922 A.2d 415 (Del. 

2007) (“None of these revisions adequately address the court’s concern as to the breadth 

of the original demand sued upon or the scope of relief Highland Select continues to 

seek.”).

270 Paraflon, 2020 WL 1655947, at *6 (“Striking the proper balance between a 

stockholders’ inspection rights and the right of a company’s board to manage the 

corporation without undue interference from stockholders is a core principle in our 

Section 220 jurisprudence. Limiting inspection to what is specified in a demand letter is 

a key way of maintaining that balance. A corporate board is entitled to be informed of 

exactly what the stockholder is demanding to inspect so it can make the call, before 
63

This general rule serves to promote litigant and judicial efficiency and is not 

strictly applied when those purposes are not furthered. For example, Section 220 

plaintiffs often lack information about what type of corporate records exist when making 

their demands. This informational asymmetry can force Section 220 plaintiffs to make 

broad requests. Tailored discovery in a Section 220 action can allow Section 220 

plaintiffs to refine their requests with greater precision and drop requests for non-existent 

information. The iterative process that occurs through Section 220 discovery thus helps 

to eliminate pointless hypothetical disputes and promote judicial and litigant efficiencies, 

all good things this court strives to encourage.271 

To that end, sometimes this court will ask Section 220 plaintiffs to revise their 

requests to streamline disputes. In Facebook, for example, the court required the 

defendant to respond to a demand as “refined by the parties’ several and meet and confer 

sessions.”272 The “refined” demand was “the version of the Demand that [the 

defendants] addressed in their pre-trial brief and at trial.”273 The court held: “The scope 

 

litigation, whether to allow inspection or litigate the demand. Holding that inspection 

will not be ordered unless a request is presented in the stockholder’s inspection demand 

preserves this balance and prevents a demand letter from turning into an iterative, 

ongoing request for production.”).

271 See, e.g., ATR-Kim Eng Fin. Corp. v. Araneta, 2006 WL 3783520, at *2 (Del. Ch. 

Dec. 21, 2006); Loppert v. WindsorTech, Inc., 865 A.2d, 1282, 1290–91 (Del. Ch. 2004); 

see also Dkt. 65, Oral Arg. Re Def.’s Mot. for Protective Order and the Ct.’s Ruling at 9–

10, 57–58.

272 In re Facebook 220, 2019 WL 2320842, at *18.

273 Id.
64

of documents requested in that version, therefore, has been properly joined for 

decision.”274 

The general rule does not promote efficiency when applied to coordinated Section 

220 actions like this case. Often, corporate actions will draw demands for inspection 

from multiple plaintiffs. In such cases, Section 220 plaintiffs may agree to coordinate 

their efforts, or sometimes the court or the defendants will ask the Section 220 plaintiffs 

to do so. A coordinated approach is almost always desirable because it allows the court 

to resolve, and the defendant to litigate, and a single Section 220 action rather than 

multiple actions. A coordinated approach also reduces the likelihood of inconsistent 

determinations on similar issues. 

In this case, it was Gilead that asked Plaintiffs to coordinate their litigation efforts, 

and Plaintiffs agreed.275 As part of their coordinated process, Plaintiffs worked together 

to narrow their over sixty overlapping documents requests to a streamlined list. 

In this context, limiting Plaintiffs to the documents they demanded before 

coordination would make no sense. There is no prejudice to Gilead in producing all 

categories of information deemed necessary and essential to all Plaintiffs. In fact, it 

would be easier for Gilead to create and track one production set rather than five. 

Gilead’s approach would force the court to conduct four separate scope analyses, 

defeating some of the judicial efficiencies gained by coordination. It would also risk 

 274 Id.

275 See supra note 85 and accompanying text.
65

inconsistent rulings on whether categories of documents were necessary and essential as 

to certain stockholder plaintiffs but not to others who seek to investigate the same 

wrongdoing. In sum, strict application of the general rule in this case would defeat the 

rule’s purpose of promote litigant and judicial efficiency.

For this reason, Gilead’s final argument seems yet another indication that Gilead’s 

real goal in this litigation is not to protect its interests but, rather, to make the process of 

investigating wrongdoing as difficult as possible for its stockholders.

D. Conditions on Inspection

This decision does not address whether it is appropriate to enter conditions on 

inspection. In its pretrial brief, Gilead asked that inspection be subject to four specific 

conditions.276 In its post-trial brief, Gilead suggests that the parties should meet and 

confer regarding the conditions.277 Plaintiffs appear to agree that a meet and confer is 

warranted.

278 The parties shall confer on whether conditions are appropriate and report to 

the court within twenty days of issuance of this decision.

 276 Dkt. 85, Def. Gilead Sciences, Inc.’s Pre-Trial Br. at 56–57 (requesting that inspection 

be subject to a mutually-agreeable form of confidentiality order, a Delaware forum 

selection provision applicable to any future litigated that uses the fruits of Plaintiffs’ 

inspection, an incorporation condition like that entered in Yahoo!, and Gilead’s ability to 

assert that certain documents are privileged or nonresponsive).

277 Def.’s Answering Br. at 60.

278 See Pls.’ Opening Br. at 62–63.
66

E. Plaintiffs Are Granted Leave to Move for Their Fees and Expenses.

Delaware courts follow the American Rule that “each party is generally expected 

to pay its own attorneys’ fees regardless of the outcome of the litigation.”279 Even under 

the American Rule, however, this court retains the ability to shift fees for bad faith 

conduct “to deter abusive litigation and protect the integrity of the judicial process.”280 In 

assessing “bad faith,” this court can consider both litigation-related conduct and the 

party’s pre-litigation conduct.281 Although there is “no single, comprehensive definition 

of ‘bad faith’ that will justify a fee-shifting award,”282 this court commonly employs the 

“glaring egregiousness” standard.283 “The bad faith exception is applied in 

 279 Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017) (citing Montgomery Cellular Hldg. 

Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005)).

280 Montgomery Cellular, 880 A.2d at 227 (internal quotation marks omitted); see also 

Martin v. Harbor Diversified, Inc., 2020 WL 568971, at *1 (Del. Ch. Feb. 5, 2020) 

(“Shifting fees for bad faith is not, properly speaking, an exception to the American Rule 

on fees; it is a method for reducing and appropriately allocating the costs of vexatious 

behavior sufficiently serious that justice requires such mitigation.”).

281 Compare In re SS & C Tech., Inc. S’holders Litig., 948 A.2d 1140, 1149–52 (Del. Ch. 

2008) (applying the bad faith exception to the American Rule and shifting fees because 

plaintiffs’ counsel brought a motion to withdraw on notice in bad faith and made a series 

of misstatements in filings “that tended to misrepresent or downplay the facts”), with 

Hardy v. Hardy, 2014 WL 3736331, at *17 (Del. Ch. July 29, 2014) (applying the bad 

faith exception to the American Rule to pre-litigation conduct and holding that the 

exception can apply “where the pre-litigation conduct of the losing party was so 

egregious as to justify an award of attorneys’ fees” (quoting Est. of E. Murton DuPont 

Carpenter v. Dinneen, 2008 WL 2950764 (Del. Ch. Mar. 26, 2008))).

282 Montgomery Cellular, 880 A.2d at 227.

283 See, e.g., RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 879 (Del. 2015) (affirming 

this court’s determination under the “glaring egregiousness” standard to shift fees); Isr. 

Disc. Bank of N.Y. v. First State Depository Co., 2013 WL 2326875, at *28–29 (Del. Ch. 

May 29, 2013) (applying the “glaring egregiousness” standard in assessing potential fee 

shifting); eBay Domestic Hldgs., Inc. v. Newmark, 16 A.3d 1, 47–48 (Del. Ch. 2010) 
67

‘extraordinary circumstances,’”284 and it “is not lightly invoked,”285 but this court has 

shifted fees in Section 220 actions where a party’s conduct rose to the level of bad 

faith.

286

Delaware courts have urged stockholders to use the “tools at hand” and pursue 

Section 220 inspections before filing derivative lawsuits for decades,

287 and this court has 

seen a rise in Section 220 enforcement actions in recent years.288 The regrettable reaction 

by defendant corporations has been massive resistance. As one academic article 

commented, “defendants have turned books and records litigation into a surrogate

proceeding to litigate the possible merits of the suit where they place obstacles in the 

plaintiffs’ way to obstruct them from employing it as a quick and easy pre-filing 

 

(same); In re Charles Wm. Smith Tr., 1999 WL 596274, at *2–4 (Del. Ch. July 23, 1999) 

(same).

284 E.g., Shawe, 157 A.3d at 150–51; Montgomery Cellular, 880 A.2d at 227; accord. 

Dover Hist. Soc., 902 A.2d at 1092; Henry v. Phixios Hldgs., Inc., 2017 WL 2928034, at 

*14 (Del. Ch. July 10, 2017) (Montgomery-Reeves, V.C.). 

285 Ravenswood Inv. Co. v. Winmill & Co., 2014 WL 2445776, at *4 (Del. Ch. May 30, 

2014) (quoting Beck v. Atl. Coast PLC, 868 A.2d 840, 851 (Del. Ch. 2005)).

286 See, e.g., Carlson v. Hallinan, 925 A.2d 506, 545–46 (Del. Ch. 2006); McGowan v. 

Empress Ent., Inc., 791 A.2d 1, 3–8 (Del. Ch. 2000); Technicorp Int’l II, Inc. v. Johnston, 

2000 WL 713750, at *44 (Del. Ch. May 31, 2000).

287 See supra note 169.

288 See Edward B. Micheletti, et al., Recent Trends in Books-and-Records Litigation, 38 

Del. Law. 18, 18 (2020) (“[T]he frequency of stockholder demands to inspect corporate 

books and records has increased . . . .”); Cox et al., supra note 6 at 2123, 2146–47 

(comparing the number of Section 220 actions filed from 1981 to 1994 with those filed 

from 2004 to 2018 and finding a thirteen-fold increase).
68

discovery tool.”289 These obstacles increase the investment required from stockholder 

plaintiffs and their counsel when pursuing Section 220 inspections.

It seems that defendants like Gilead think that there are no real downsides to 

overly aggressive defense campaigns at the Section 220 phase. Although aggressively

defending a Section 220 action will result in higher defense costs during that phase, the 

approach can undermine follow-on derivative claims if successful, thereby lowering net 

costs for defendants. Even if the approach is unsuccessful in thwarting inspection, the 

work product created in building legal defenses to follow-on derivative claims can be 

repurposed in the context of the derivative suit. And the risk of reputational harm to 

defendants resulting from a decision detailing possible corporate wrongdoing rendered 

under a plaintiff-friendly Section 220 appears to lack the deterrent effect one might 

expect it to have.

Scholars have recommended fee shifting as one means of recalibrating the risks of 

Section 220 litigation.

290 This proposition finds support in prior decisions of this court

and the Model Business Corporation Act.

291

 289 Cox et al., supra note 6 at 2150.

290 See id. at 2151 (“Delaware should give serious consideration to awarding plaintiffs 

their attorneys’ fees in cases where the defendants make untoward efforts to delay the 

resolution of these summary cases.”); Randall Thomas, Improving Shareholder 

Monitoring of Corporate Management by Expanding Statutory Access to Information, 38 

Ariz. L. Rev. 331, 335 (1996) (arguing that for Section 220 to facilitate effective 

stockholder monitoring, it must be significantly streamlined, including shifting attorneys’ 

fees to deter frivolous refusals to produce information).

291 See supra note 286; Model Business Corporation Act § 16.04(c) (“If the court orders 

inspection and copying of the records demanded, it shall also order the corporation to pay 
69

Fee shifting may be appropriate here. Gilead exemplified the trend of overly 

aggressive litigation strategies by blocking legitimate discovery, misrepresenting the 

record, and taking positions for no apparent purpose other than obstructing the exercise of 

Plaintiffs’ statutory rights. Gilead’s pre-litigation failure to provide any Plaintiff with

even a single document despite the ample evidence of a credible basis and the obvious 

responsiveness of certain categories of documents amplifies the court’s concerns.

For these reasons, Plaintiffs are granted leave to move for fee-shifting. 

III. CONCLUSION

For the foregoing reasons, judgment is entered in favor of Plaintiffs. The parties 

shall confer regarding conditions on inspection and concerning a form of order 

memorializing the scope of Gilead’s production. Plaintiffs may seek leave to move for 

fee-shifting. 

 

the shareholder’s costs (including reasonable counsel fees) incurred to obtain the order 

unless the corporation proves that it refused inspection in good faith because it had a 

reasonable basis for doubt about the right of the shareholder to inspect the records 

demanded.”).