IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

DENNIS JACOB and 

MICHAEL BOLOURI,

 Plaintiffs,

 v.

BLOOM ENERGY CORPORATION,

 Defendant.

)

)

)

)

)

)

)

)

)

)

 

 

 

 

 C.A. No. 2020-0023-JRS

MEMORANDUM OPINION

Date Submitted: December 7, 2020

Date Decided: February 25, 2021

Blake A. Bennett, Esquire of Cooch and Taylor, P.A., Wilmington, Delaware and 

Sam Bonderoff, Esquire, James Ostaszewski, Esquire and Matthew Hendrickson, 

Esquire of Zamansky LLC, New York, New York, Attorneys for Plaintiffs Dennis 

Jacob and Michael Bolouri.

Kevin G. Abrams, Esquire, John M. Seaman, Esquire and Eliezer Y. Feinstein, 

Esquire of Abrams & Bayliss LLP, Wilmington, Delaware, Attorneys for Defendant 

Bloom Energy Corporation.

SLIGHTS, Vice Chancellor 
1

On September 17, 2019, forensic analysts at Hindenburg Research published 

a 54-page report (the “Hindenburg Report”), which concluded that Defendant,

Bloom Energy, Inc. (“Bloom” or the “Company”), had misrepresented its financials 

and the performance of its “green” energy technology.

1

 The Hindenburg Report 

drew on public disclosures, private interviews with industry experts and customers, 

as well as previously filed lawsuits to make its case that Bloom was misleading its 

shareholders. It also disclosed that Hindenburg “ha[d] taken a short position in 

shares of Bloom.”2

 The day the Hindenburg Report was published, Bloom’s stock 

price dropped over 21%, closing at $3.31 per share.3

 

In response, on September 18, 2019, Bloom filed a Form 8-K with the 

Securities and Exchange Commission (“SEC”) to refute the claims made in the 

Hindenburg Report.

4

 In February 2020, the Company filed another Form 8-K, where 

it disclosed that it would revise how the Company accounts for certain of its 

revenues.5

1 Joint Trial Exhibit (“JX”) 9. I cite to the docket items as “D.I. __,” the Pre-Trial Stip. 

and Order (D.I. 34) as “PTO __,” the Verified Am. Compl. Pursuant to 8 Del. C. § 220 to 

Compel Inspection of Books and Records (D.I. 7) as “Compl. __” and the Section 220 Trial 

Transcript (D.I. 38) as “Tr. __.”

2 PTO ¶ 4; JX 9 at 2, 51–52. 

3 Compl. ¶ 47. 

4 JX 10.

5 JX 32.
2

Shareholders apparently were not comforted by either of Bloom’s reactive 

Form 8-K filings. A Bloom shareholder filed a securities action in California 

(the “Roberts Complaint”), in which it was alleged that the questionable accounting 

practices highlighted by the Hindenburg Report violated Generally Accepted 

Accounting Principles (“GAAP”) and positive law.6

 And Plaintiffs, Dennis Jacob 

and Michael Bolouri, separately demanded to inspect Bloom’s books and records

(the “Demands”) under Section 220 of the Delaware General Corporation Law 

(“Section 220”) in their capacity as Bloom stockholders for multiple stated purposes, 

including to investigate potential mismanagement by Bloom’s board of directors 

(the “Board”) and officers.

7

 Bloom rejected the Demands on the grounds that the 

Hindenburg Report, as a short report, was inherently unreliable and could not 

support a credible basis to suspect wrongdoing, and that the scope of documents 

sought was too broad. This litigation followed. 

After conducting trial on a paper record and carefully considering the trial 

presentations, I deny Bolouri’s demand for inspection because he has not met his 

burden to demonstrate compliance with Section 220’s form and manner 

6 JX 44 (“Roberts Compl.”).

7 Compl. ¶¶ 1–2; PTO ¶¶ 9–18. 
3

requirements.8

 For reasons explained below, I grant Jacob’s demand for inspection 

but narrow the scope of documents Bloom must produce.

I. BACKGROUND

The Court presided over a one-day trial on December 7, 2020.9

 The following 

facts were proven by a preponderance of the evidence against the backdrop of 

Section 220’s credible basis standard.10

A. The Parties

Plaintiff, Dennis Jacob, is the beneficial owner of Bloom common stock, 

having continuously held his shares since at least August 2019.11 Plaintiff, Michael 

Bolouri, claims to be a beneficial owner of Bloom common stock, having first 

acquired his shares one year prior to the time his counsel made his Demand.12 

8 See Tr. at 54:16–21, 107:5–22, 108:2–21.

9 See id. at 1; PTO ¶ 38.

10 Plaintiffs’ evidence is comprised mainly of publicly available information, including 

newspaper reports. They also rely (to a limited extent) on interviews with anonymous 

experts, as cited in the Roberts Complaint and Hindenburg Report. I am mindful that these 

sources are hearsay and, in some cases, double hearsay. “Even so, in a Section 220 

proceeding, ‘[h]earsay statements may be considered, provided they are sufficiently 

reliable.’” In re Facebook, Inc. Section 220 Litig., 2019 WL 2320842, at *2 n.10 (Del. Ch. 

May 30, 2019) (quoting Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 778 (Del. Ch. 

2016)). Given the minimal weight I have given this evidence in relation to other evidence, 

I am satisfied it is admissible to support Plaintiffs’ credible basis showing. 

11 JX 13 Ex. A.

12 JX 24 Ex. A at 2.
4

Defendant, Bloom, is a Delaware corporation operating in the alternative energy 

space.

13 

B. Bloom’s Business

Bloom was founded in 2001 to offer a reliable and affordable source of 

energy.14 The Company manufactures solid-oxide fuel cells that provide customers 

with an alternative to accessing energy from the electrical grid.15 Its primary product 

is the Bloom Energy Server (“Energy Server”), a stationary power generation 

platform which Bloom claims can deliver reliable, constant power that is both clean 

and sustainable.16 Energy Servers use an innovative fuel cell technology to convert 

standard low-pressure natural gas or biogas into electricity through an 

electrochemical process without combustion.17 According to Bloom, the process 

allows for more efficient energy generation, with reduced operating costs and lower 

greenhouse gas emissions, as compared to conventional fossil fuels.

18 The Energy 

13 PTO ¶ 1. 

14 JX 1 at 134. 

15 Tr. 56:3–6.

16 Id. at 56:6–9.

17 JX 1 at 150; Tr. 56:10–17.

18 JX 8 at 10.
5

Servers are installed on-site to increase electrical reliability and improve the energy 

grid’s resiliency and security.19

Bloom generates revenue in three principal ways: (1) selling Energy Servers, 

(2) installing Energy Servers at a customer’s location, and (3) providing maintenance 

after the Energy Servers have been installed.

20 Customers can access the Company’s 

technology by any of several methods, including purchasing the servers outright, 

leasing servers from a bank financing party or paying for power without purchasing 

the servers themselves.21 Despite these multiple sources of revenue, Bloom has 

sustained net losses for every period from 2016 to present and depends heavily on 

government subsidies.

22 Thus, Bloom’s shareholders made their investments based 

not on the Company’s current profits, but rather on the promise of its technology and 

the scalability of its business model as marketed.

C. The Hindenburg Report

On September 17, 2019, Hindenburg Research published the Hindenburg 

Report, a 54-page document detailing an investigation that led Hindenburg to 

conclude, contrary to the Company’s public representations, that Bloom’s 

19 Id.

20 Tr. 56:18–22; JX 1 at 154.

21 Tr. 56:23–57:3.

22 Id. at 57:8–9, 77:23–78:4; JX 4; JX 5; JX 6; JX 7; JX 8; JX 22; JX 23.
6

technology was neither profitable nor clean.

23 Specifically, the Hindenburg Report 

claimed: (1) Bloom’s debt had reached “unsustainable levels”; (2) Bloom used 

deceptive accounting practices to hide servicing liabilities in its Master Servicing 

Agreements (“MSAs”); (3) Bloom inaccurately estimated the life of its fuel cells; 

(4) Bloom booked substantial write-downs in the pre-IPO period (where investors 

could not see the write-downs) while booking new revenue that improved the 

financials disclosed publicly in the IPO; and (5) Bloom was not a “clean” energy 

company, placing the government subsidies it had garnered on that account in 

jeopardy.24

To substantiate its claims, the Hindenburg Report drew on news reports, 

Bloom’s securities disclosures, data on the Company’s Energy Servers made 

publicly available on state government websites, prior lawsuits and interviews with 

Bloom customers and expert witnesses.25 Appendices were provided to explain 

Hindenburg’s methodology and link its collected data, providing readers with the 

tools to verify its work by replicating the analysis.26 There was a customary 

23 See generally JX 9.

24 Id. at 1–2.

25 Id. at 29–31, 38–42, 46–50.

26 Id. at 46–48.
7

disclosure in the report that Hindenburg “ha[d] taken a short position in shares of 

Bloom.”27 

D. The Hindenburg Report’s Fallout

The day the Hindenburg Report was published, Bloom’s stock price dropped 

over 21%, closing at $3.31 per share.28 The next day, September 18, 2019, Bloom 

responded to the Hindenburg Report by filing a Form 8-K with the SEC.

29 In the 

Form 8-K, Bloom stated its position that the Hindenburg Report contained “factual 

inaccuracies” and “misleading allegations” and explained that it “fe[lt] obligated to 

correct the record . . . .”30

Five months later, on February 12, 2020, Bloom filed a Form 8-K with the 

SEC in which it disclosed:

On February 11, 2020, the Audit Committee of the Board of Directors

(the “Audit Committee”) of Bloom Energy Corporation 

(the “Company” or “Bloom”) determined that its previously issued 

financial statements as of and for the year ended December 31, 2018, 

as well as financial statements for the three-month period ended 

March 31, 2019, the three- and six-month periods ended June 30, 2019 

and 2018 and the three- and nine-month periods ended September 30, 

2019 and 2018 (collectively, the “Prior Period Financial Statements”), 

27 PTO ¶ 4.

28 Compl. ¶ 47.

29 JX 10.

30 Id.
8

should no longer be relied upon due to an error in accounting for the 

Company’s Managed Services Agreements (the “Impacted MSAs”).31

Though the Hindenburg Report criticized Bloom’s accounting for liabilities 

associated with MSAs, the Form 8-K was not responsive to that criticism since it 

addressed accounting for revenues derived from the MSAs.

32

On April 21, 2020, Bloom stockholders brought a class action in the Northern 

District of California, styled Roberts v. Bloom Energy Corp., asserting claims of 

securities fraud against Bloom, along with several of its officers and directors.

33

The Roberts Complaint comprises 522 paragraphs and alleges Bloom misled 

investors by, inter alia, (i) “improperly accounting for loss contingencies relating to 

its Energy Servers”; (ii) “misrepresenting the life cycle of its fuel cells”;

(iii) “improperly accounting for revenue”; (iv) “failing to review weaknesses in its 

internal controls”; and (v) “misrepresenting the efficiency and pollution output of its 

Energy Servers.”34 

Like the plaintiffs in the Roberts action, Plaintiffs here were concerned by the 

issues raised in the Hindenburg Report and directed demands for inspection of books 

31 PTO ¶ 6. 

32 Id at ¶¶ 3, 6.; JX 9. 

33 PTO ¶ 7; Roberts Compl.

34 Roberts Compl. ¶ 3.
9

and records to Bloom on September 25, 2020 (Jacob) and November 25, 2020 

(Bolouri).

35 Both Demands stated four purposes for inspection: (i) to investigate

potential wrongdoing, mismanagement and breaches of fiduciary duties by 

management and the Board in connection with the events, circumstances, and 

transactions described in the Hindenburg Report; (ii) to assess the ability of the

Board to impartially consider a demand for action; (iii) to seek an audience with the 

Board to discuss potential reforms; and (iv) to take appropriate action in the event 

management and the Board did not properly discharge their duties, including the 

preparation and filing of a stockholder derivative lawsuit, if appropriate.36 

For his part, Jacob’s Demand identified four categories of documents for 

inspection dating back to July 2017:

1. Board Materials relating to, concerning or reflecting: (a) Bloom’s 

accounting practices; (b) the Company’s servicing costs and liabilities; 

(c) any discrepancies between the actual and anticipated servicing costs and 

liabilities; (d) the Company’s “clean” energy claims; (e) the Company’s 

CO2 emissions; (f) the meetings of the Board and any of its committees

(without limitation); (g) any and all inquiries or investigations of the 

35 JX 13 (Jacob’s Demand); JX 24 (Bolouri’s Demand).

36 JX 13 (Jacob’s Demand); JX 24 (Bolouri’s Demand).
10

Company by any federal, state, or local government regulators or law 

enforcement agencies regarding the Company’s accounting practices; and 

(h) any internal investigations by the Company of any employees or 

officers for accounting irregularities.

2. Documents reflecting the Company’s investigation by any federal, state, or 

local government regulators or law enforcement agencies for accounting 

irregularities. 

3. Documents reflecting the Company’s investigation of any officer or 

employee for accounting irregularities.

4. Documents reflecting the servicing costs and liabilities that the Company 

expected to incur.37

Bolouri’s Demand was nearly identical but did not include Categories 1(d), 1(e),

3 or 4 and sought documents dating back to May 2018.

38 Plaintiffs initiated this 

Section 220 action after Bloom rejected both Demands. 

37 JX 13.

38 JX 24.
11

E. Procedural History 

On March 9, 2020, Plaintiffs jointly filed their operative Complaint.

39 The 

parties submitted Pre-Trial Briefing on November 25, 2020.

40 Trial convened on 

December 7, 2020, and the matter was submitted for decision that day.41

II. ANALYSIS

A plaintiff seeking to inspect books and records under Section 220 

“must establish by a preponderance of the evidence that [he] 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.”42 If each of these 

requirements are met, the plaintiff must then show “that each category of the books 

and records requested is essential and sufficient to the stockholder’s stated 

purpose.”43

Bloom objects to the Demands on three grounds. First, Bloom argues that one 

of the Plaintiffs—Bolouri—has failed to comply with Section 220’s form and 

manner requirements. Second, Bloom asserts that neither Plaintiff has stated a 

39 Compl. at 1. 

40 D.I. 32, 33. 

41 Tr. at 1. 

42 Pettry v. Gilead Scis., Inc., 2020 WL 6870461, at *9 (Del. Ch. Nov. 24, 2020).

43 Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026, 1035 (Del. 1996).
12

proper purpose for inspection. Finally, Bloom contends that the scope of the 

Demands is overly broad. I address each objection in turn.

A. The Form and Manner Objection

“Delaware courts require strict adherence to the [S]ection 220 inspection 

demand procedural requirements.”44 Those requirements are stated in 

Section 220(b), where the General Assembly has directed that a stockholder’s

demand for inspection must “state [under oath] the person’s status as a stockholder, 

be accompanied by documentary evidence of beneficial ownership of the stock, and 

state that such documentary evidence is a true and correct copy of what it purports 

to be.”45 Documentary evidence of ownership should be “at a point proximate to the 

date of the Demand.”46 As Chancellor Chandler explained in Smith v. Horizon 

Lines, Inc., “[t]he purpose of § 220 is not served if the shareholder supplies a 

document that does not actually evidence that she is the beneficial owner of the 

company’s stock on the relevant date.”47

Contrary to Section 220(b), the Bolouri Demand was not accompanied by 

satisfactory documentary evidence demonstrating that he was a Bloom stockholder 

44 Cent. Laborers Pension Fund v. News Corp., 45 A.3d 139, 145 (Del. 2012).

45 8 Del. C. § 220(b). 

46 Amalgamated Bank, 132 A.3d at 776.

47 Smith, 2009 WL 2913887, at *2 (Del. Ch. Aug. 31, 2009).
13

at a point proximate to the date of the Demand. Rather, Bolouri attached an 

E*TRADE account statement purporting to show that he acquired 25 shares of 

Bloom Class A Common Stock on October 12, 2018, and held those shares through 

October 31, 2018.

48 This documentation did not allow Bloom to assess whether 

Bolouri was a stockholder at the time Bolouri’s Demand was made—more than a 

full year later, on November 25, 2019.49 

Though Bolouri’s documentary evidence was accompanied by an affidavit in 

which he swore the attached documents were “true and correct,”50 Section 220 

requires both “‘documentary evidence of beneficial ownership of the stock’ and that 

the beneficial owner ‘state that such documentary evidence is a true and correct copy 

of what it purports to be.’”51 As the court in Smith aptly observed, “[i]f a sworn 

statement alone is sufficient, then what purpose would be served by ‘documentary 

evidence of beneficial ownership?’”52 Indeed, by Section 220(b)’s terms, the 

affidavit serves only to affirm the truthfulness of what the requisite documentary 

48 See JX 24.

49 Id.

50 Id.

51 Smith, 2009 WL 2913887, at *2 (quoting 8 Del. C. § 220(b)) (emphasis added).

52 Id. 
14

evidence of beneficial ownership “purports to be.”53 In other words, the affidavit 

itself is not the evidence of ownership; the affidavit simply verifies that the actual 

evidence of ownership is true and correct. 

Section 220’s form and manner requirements strike the appropriate balance 

between a stockholder’s right to inspection and the company’s ability to function 

free from a flood of baseless shareholder demands for documents.54 Weighed on 

these scales, the burden placed on the stockholder to provide proper documentary 

evidence of beneficial ownership of stock at a point proximate to the date of his 

demand is relatively minimal and it must be fulfilled before the company will be 

expected to respond. Because Bolouri failed to comply with Section 220’s form and 

manner requirements, the Company was justified in rejecting his demand for 

inspection.

55

53 8 Del. C. § 220(b) (emphasis added).

54 See Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 122–23 (Del. 2006).

55 Bolouri’s subsequent attempt to cure the deficiency through a letter from his attorney 

was likewise deficient. See JX 29. The letter lacked the required oaths, a power of 

attorney, disclosure of Bolouri’s purported purposes in making the demand or any clear 

statement of the documents Bolouri sought to inspect. See Weisman v. W. Pac. Indus., Inc., 

344 A.2d 267, 267–68 (Del. Ch. 1975) (holding that an attorney letter following rejection 

of the original demand did not independently meet the statutory requirements and would 

“not be considered . . . in testing the sufficiency of” the original demand).
15

B. The Proper Purpose Objection to the Jacob Demand

Bloom does not dispute that Jacob’s Demand complied with the statutory form 

and manner requirements.56 Instead, Bloom maintains that Jacob’s stated purpose 

of investigating wrongdoing, while proper on its face, is not actually proper because 

Jacob has failed to carry his burden of presenting a credible basis to suspect 

wrongdoing.

“[C]redible basis” is the “lowest burden of proof known in our law; it requires 

merely that the plaintiff put forward some evidence of wrongdoing.”57 In other 

words, “a stockholder is not required to prove that wrongdoing occurred, only that 

there is possible mismanagement that would warrant further investigation.”58 

The stockholder may carry its burden of proof through the presentation of 

“documents, logic, testimony or otherwise,”59 and may point to “on-going lawsuits, 

investigations, circumstantial evidence, and even hearsay statements evincing 

possible wrongdoing.”60 

56 See Def.’s Pre-Trial Br. (D.I. 32) at 29. 

57 Kosinski v. GGP Inc., 214 A.3d 944, 953 n.77 (Del. Ch. 2019) (internal quotations and 

citation omitted). 

58 AmerisourceBergen Corp. v. Lebanon Cty. Emps.’ Ret. Fund, 243 A.3d 417, 432

(Del. 2020) (“AmerisourceBergen II”) (internal quotations and citations omitted).

59 Sec. First Corp. v. U.S. Die Casting & Dev. Co., 687 A.2d 563, 568 (Del. 1997).

60 Pettry, 2020 WL 6870461, at *11.
16

According to Bloom, Jacob has failed to meet his credible basis burden for 

two reasons. First, he has relied almost entirely upon incompetent evidence—

namely the Hindenburg Report. Second, he has failed to account for the fact that the 

Company thoroughly rebutted the Hindenburg Report’s allegations in its responsive 

Form 8-K filings. For reasons explained below, I disagree on both fronts.

Bloom’s characterization of the state of our law regarding the weight to be 

given to so-called “short reports” when assessing the strength of a stockholder’s 

credible basis showing is exaggerated. It is true, as Bloom points out, that this Court 

has observed that those who write short reports, like the Hindenburg Report, have 

incentives to spin financial analyses to suit their own investment strategies.61

But such observations cannot and should not be construed as a declaration that all 

short reports, and all content within a short report, carry no probative weight as the 

court assesses the quantum of evidence supporting a stockholder’s stated purpose 

for inspection. Here, by Bloom’s own admission, the Hindenburg Report relies 

primarily on publicly available and vetted information, along with litigation filings 

and expert testimony. While there may well be bases to undermine that evidence,

61 See, e.g., Haque v. Tesla Motors, Inc., 2017 WL 448594, at *11 (Del. Ch. Feb. 2, 2017) 

(finding that opinions expressed in a short report based on skewed analyses of financial 

data had limited evidentiary potency).
17

should it see the light of plenary litigation, it is, on this record, “‘some evidence’

of . . . wrongdoing.”62 

Bloom’s argument that its September 18, 2019, Form 8-K and press release 

(JX 10) fully discredited the Hindenburg Report reflects an improper attempt to 

“draw the court into adjudicating merits defenses to potential underlying claims in 

order to defeat [an] otherwise properly supported Section 220 demand[].”63 To be 

clear, “a Section 220 proceeding does not warrant a trial on the merits of underlying 

claims.”64 

In this case, Jacob’s credible basis showing rests on firm evidentiary ground. 

First and most fundamentally, there is some evidence suggesting Bloom 

misleadingly overestimated the lifetime of its products and underestimated its 

liabilities for servicing those products through certain accounting practices, 

purportedly masking $2.2 billion of servicing liabilities from its stockholders and 

62 Kosinski, 214 A.3d at 953; see also Paul v. China MediaExpress Hldgs., Inc., 

2012 WL 28818, at *5 (Del. Ch. Jan. 5, 2012) (noting that short seller reports will be given

more weight where “the events that occurred after the publication of the challenged 

reports . . . reinforce[d] the shortsellers’ claims”).

63 Lavin v. West Corp., 2017 WL 6728702, at *1 (Del. Ch. Dec. 29, 2017); see also 

AmerisourceBergen II, 243 A.3d at 437 (observing, “the interjection of merits-based 

defenses—defenses that turn on the quality of the wrongdoing to be investigated—

interferes with [the ‘summary’ and expedited] process” of Section 220 litigation). 

64 Barnes v. Sprouts Farmers Mkt., 2018 WL 3471351, at *5 (Del. Ch. Jul. 18, 2018).
18

the market.

65 Public data on Bloom’s projects, sourced from various state 

governments’ utility records and made available through state government websites, 

suggest Bloom understated in public disclosures the rate at which its fuel cells 

degrade.66 The information obtained was corroborated by interviews with business 

clients such as Home Depot, the testimony of two experts in fuel cells (one with 

14 years of experience and the other with 19 years of experience and a Ph.D. in 

mechanical engineering), as well as a fuel cell technology graduate professor.

67 

Though Hindenburg’s decision not to identify the experts by name detracts from the

weight to be given this evidence, the volume, expertise and tenor of the testimony 

still register on the undeniably sensitive credible basis scale.

As for the accounting, Bloom was in the practice of providing customers with 

generous guarantees for servicing its equipment for the life of the contract under an

MSA.

68 While these relationships typically lasted up to 25 years, Bloom would 

report its servicing liabilities for only one year by giving customers the “option” to 

renew the MSA on an annual basis.

69 Though Bloom points out the Hindenburg 

65 JX 9 at 14, 38–42, 46–48.

66 Id. at 46–48.

67 Id. at 14, 38–42. 

68 See JX 6 at 90–91.

69 See id. at 14, 39, 90–91.
19

Report leaves open whether either of these practices violated GAAP,

70 the Roberts

Complaint closes that circle, for Section 220 purposes, by connecting those practices 

to violations of positive law. Specifically, the Roberts Complaint explains how the 

servicing work related to MSAs was required to be disclosed differently under 

Section 11 of the Securities Act, not only because this information was material 

(and therefore deserving of disclosure in its own right) but also because the liabilities 

were reasonably estimable and, as such, were required to be disclosed under both 

Item 303 of Regulation S-K and GAAP.

71 By Bloom’s own admission in its public 

disclosures, “virtually no customers have elected to cancel their maintenance 

agreements.”72 It follows syllogistically, therefore, that Bloom’s maintenance 

agreements are reasonably estimable by virtue of the Company’s high customer 

retention rates and therefore, at least arguably, should be disclosed differently.

70 See Beatrice Corwin Living Irrevocable Tr. v. Pfizer, Inc., 2016 WL 4548101, at *1, *4–

7 (Del. Ch. Aug. 31, 2016) as revised (Sept. 1, 2016) (rejecting a stockholder’s demand 

that attempted to establish credible basis through evidence that the company failed to 

comply with GAAP after the stockholder failed to connect the alleged noncompliance with 

the board’s oversight, and the plaintiff’s only stated purpose was to pursue a Caremark

claim).

71 Roberts Compl. ¶¶ 65–73.

72 JX 9 at 9 (quoting page 123 of Bloom’s IPO Prospectus); see also JX 6 (Bloom’s

statement in its 10-K that “[h]istorically, our customers have almost always exercised their 

option to renew . . . .”).
20

While these are, of course, only allegations, this court has made clear that 

“[o]ngoing investigations and lawsuits can provide the necessary evidentiary basis 

to suspect wrongdoing or mismanagement warranting further investigation.”73 

And again, the low credible basis threshold is met where wrongdoing is merely 

possible—it need not be proven.

Even if the Court were to entertain Bloom’s merits-based defense, Jacob 

correctly observes that the Company’s Form 8-K filings actually may support, rather 

than defeat, an inference of wrongdoing. Specifically, Jacob argues that Bloom’s 

reactive filing of a second Form 8-K shortly after the Hindenburg Report was 

published, in which it disclosed “an error in accounting for the Company’s [MSAs],” 

suggests the Company knew it had to get out in front of the impact of the Hindenburg 

Report as best it could.74 Though both parties agree the revenue restatement did not 

relate directly to the servicing liability-oriented allegations in the Hindenburg 

Report, it nonetheless provides some credence to Jacob’s concern regarding the 

robustness of Bloom’s independent controls on their financial reporting. Bloom’s 

contrary contention—that a restatement signals an energized Audit Committee—is, 

without more context, debatable given that the restatement came so shortly after the 

73 Lebanon Cty. Emps.’ Ret. Fund v. AmerisourceBergen Corp., 2020 WL 132752, at *9 

(Del. Ch. Jan. 13, 2020) (“AmerisourceBergen I”), aff’d, 243 A.3d 417 (Del. 2020).

74 PTO ¶ 6. As noted, the accounting error resulted in a write-down of $180 million in 

revenue. See JX 32.
21

Hindenburg Report and appears, at least on this record, to have been prompted

by it.75 

As a final observation on Bloom’s merits defense, I note the Hindenburg 

Report cited public information evidencing that Bloom issued misleading 

representations regarding its technology’s environmental hallmarks. Specifically, 

the report cites data tracked by governments “collected from hundreds of Bloom 

projects” to show the Company’s projects “generate more CO2 than the electric grid 

in key states they operate in and produce CO2 levels comparable to modern natural 

gas power plants.”76 Bloom’s government subsidies, which Bloom admits are

foundational to its commercial viability, are contingent on Bloom’s status as a 

“green” energy alternative.

77 

Bloom responds by arguing the Demands, Jacob’s Complaint and subsequent 

briefing never identify any misstatements related to Bloom’s “green” company 

status, never identify any specific actions that were taken to reduce or eliminate 

Bloom’s subsidies, and never explain how a decision to discontinue some or all of 

75 Compare JX 9 (the Hindenburg Report, published September 17, 2019), with JX 32

(the Form 8-K restatement, published February 12, 2020).

76 JX 9 at 4.

77 Tr. 77:23–78:4 (Bloom’s admission that “[i]t’s . . . true that the company relied on 

subsidies”); see also JX 9 at 5–6, 21–34, 49–50 (linking to articles documenting 

jurisdictions’ reduction or revocation of Bloom’s subsidies).
22

Bloom’s government subsidies would be evidence of wrongful conduct. Here again, 

Bloom winks at the evidentiary record. The Roberts Complaint highlights an

independent study conducted by the University of Delaware published in 2019

showing that Bloom overstates the efficiency of its fuel cells by 20% in public 

disclosures.78 It also documents how a group of Delaware Senators relied upon 

Bloom’s apparently misleading public data to suggest a “substantial fine 

(e.g., $100,000) for every day that CO2 emissions from Bloom fuel cells exceeds 

700 pounds per MWH.”79 The perceived state of Bloom’s emissions prompted 

Delaware State Senator David Lawson to declare the following with respect to 

Bloom: “I think we were sold a bill of goods.”80 

In a last gasp, Bloom contends that Jacob must, but has not, demonstrated that 

Bloom’s officers and directors were specifically complicit in or aware of the 

underlying wrongdoing. But our Supreme Court in AmerisourceBergen II recently 

“dispel[led] the notion that a stockholder who demonstrates a credible basis from 

which the court can infer wrongdoing or mismanagement must demonstrate that the 

wrongdoing or mismanagement is actionable.”81 Accordingly, at this stage, to earn 

78 Roberts Compl. ¶ 98.

79 Roberts Compl. ¶ 102 (quoting directly from the Delaware Senators’ letter).

80 JX 9 at 31.

81 AmerisourceBergen II, 243 A.3d at 431.
23

his inspection rights, Jacob need not attempt to connect Bloom’s possible 

wrongdoing directly to individual members of the Board or Company officers.82

* * * * *

To reiterate, Jacob’s burden to demonstrate a proper purpose did not present 

a Herculean task; instead, it presented the lowest burden of proof recognized in our 

law. Jacob has carried that burden with ease.83

C. The Scope Objection

As part of his prima facie burden, a Section 220 plaintiff must prove “that 

each category of the books and records requested is essential and sufficient to [his] 

stated purpose.”84 “[W]here a § 220 claim is based on alleged corporate 

wrongdoing, . . . the stockholder should be given enough information to effectively 

address the problem, either through derivative litigation or through direct contact 

with the corporation’s directors and/or stockholders.”85 

82 See Seinfeld, 909 A.2d at 123.

83 See Pettry, 2020 WL 6870461, at *13–14. 

84 Thomas & Betts, 681 A.2d at 1035; see also Saito v. McKesson HBOC, Inc., 806 A.2d 

113, 115 (Del. 2002) (holding that a plaintiff should receive “access to all of the documents 

in the corporation’s possession, custody or control, that are necessary to satisfy 

[the plaintiff’s] proper purpose”); KT4 P’rs LLC v. Palantir Techs. Inc., 203 A.3d 738, 752 

(Del. 2019) (observing that, under Section 220, the stockholder is entitled to inspect what 

is “essential” but not what is beyond “sufficient”).

85 Saito, 806 A.2d at 115.
24

Jacob seeks four categories of documents for the period starting July 1, 2017,

through the date of the Demands. Bloom objects that each individual category is too 

broad. But first, it asserts two blanket objections that apply equally across all 

categories. 

First, Bloom asserts that Bolouri’s Demand is narrower than Jacob’s Demand 

in several respects and, given that both Demands were prepared by the same law 

firm and state similar purposes, Jacob’s Demand should be trimmed to mirror

Bolouri’s. I disagree. Each stockholder has his own right to make a demand on the 

company in which he holds shares. Thus, the yardstick against which the Court will 

measure the appropriate scope of inspection is not another stockholder’s demand, 

however similar in purpose, but rather the stockholder’s own demand, including the 

purposes stated and scope of documents requested therein. 

Bloom’s second blanket scope objection is temporal: Bloom argues Jacob’s 

request to inspect documents dating back to July 1, 2017, is arbitrary since it would 

require the production of documents that predate the Company’s Initial Public 

Offering on July 24, 2018, and the time Jacob first acquired shares in the Company. 

The temporal scope of a Section 220 inspection that is based on suspected 

wrongdoing or mismanagement extends to the time when the evidence reveals the 
25

wrongdoing or mismanagement began.

86 Here, the record reveals there is a credible 

basis to suspect that Bloom’s misrepresentations regarding the scope of its salutary 

environmental impact date back to 2016.87 As for the fuel cells, Bloom’s

IPO Prospectus represented that the expected lifespan for its fuel cells “from 2017 

onwards,” i.e., one year prior to the IPO, would “average over five years between 

replacements.”88 Jacob has presented a credible basis to suspect that representation 

was false.89 And Jacob has presented evidence to support a credible basis to suspect 

the issues surrounding Bloom’s misstated financial statements likely predated 

86 See AmerisourceBergen I, 2020 WL 132752, at *27. It follows that, contrary to Bloom’s 

contention, a stockholder may inspect records that predate his initial stock purchase in the 

company that is the target of his inspection demand. Id.

87 JX 9 at 27 (discussing a lawsuit against Bloom in which it was alleged that the Company 

was dumping hazardous waste into public landfills). The Court is mindful that past 

lawsuits against a company do not necessarily constitute credible evidence of ongoing 

malfeasance. See Louisiana Mun. Police Emps.’ Ret. Sys. v. Lennar Corp., 2012 

WL 4760881, at *3–4 (Del. Ch. Oct. 5, 2012). As discussed, however, the evidence on

record (including independent academic studies and data collected and disclosed by state 

government entities) provides a credible basis to believe that Bloom’s alleged 

misrepresentations concerning its technology’s environmental impact persist. See JX 9 

at 31; Roberts Compl. ¶¶ 98, 102.

88 JX 9 at 47 (quoting page 61 of Bloom’s IPO Prospectus).

89 Id. at 10–15 (interviewing experts who did not believe the Company’s fuel cells could 

last for Bloom’s represented five-year term and sourcing public data tracking Bloom’s fuel 

cells from state government websites, such as California and New York, to corroborate 

those opinions).
26

the IPO.

90 Based on the record, I am satisfied that Jacob’s July 1, 2017, start date 

for production is appropriate.

Bloom’s other objections relate to the scope of each individual category of 

requested documents, which I address in sequence. Turning to Category 1, Jacob 

seeks Board Materials relating to, concerning or reflecting, (a) Bloom’s accounting 

practices; (b) the Company’s servicing costs and liabilities; (c) any discrepancies 

between the actual and anticipated servicing costs and liabilities; (d) the Company’s 

“clean” energy claims; (e) the Company’s CO2 emissions; (f) the meetings of the 

Board and any of its committees; (g) any and all inquiries or investigations of the 

Company by any federal, state, or local government regulators or law enforcement 

agencies regarding the Company’s accounting practices; and (h) any internal 

investigations by the Company of any employees or officers for accounting 

irregularities.

91 The term “Board Materials” is defined to include, but is not limited 

to, “any memoranda, presentations, reports, correspondence, emails, minutes, 

recordings, consents, agendas, resolutions, charters, summaries, analyses, 

transcripts, notes, letters, packages and other similar documents created by, 

90 JX 9 at 36–37 (sourcing publicly filed court documents and a 2018 Wall Street Journal 

article detailing Bloom’s role in promoting misstatements concerning its business that 

resulted in an SEC lawsuit against brokers and a $16.7 million payment by Bloom to those 

brokers); JX 44. 

91 JX 13.
27

distributed to or received by or on behalf of the Board or any committees established 

by the Board.”92 

I agree with Bloom that Category 1’s scope is overly broad. As noted, the 

term Board Materials includes “emails . . . received by or on behalf of the Board or 

any committees established by the Board.” This extends beyond the formal board 

materials this court typically finds are “sufficient” to satisfy the stockholder’s 

purpose.

93 “The starting point—and often the ending point—for a sufficient 

inspection will be board level documents evidencing the directors’ decisions and 

deliberations, as well as the materials that the directors received and considered.”94 

Jacob cites Inter-Local Pension Fund GCC/IBT v. Calgon Carbon Corp. for the 

proposition that emails are necessary and essential here.95 But unlike in Calgon, 

where the record revealed the target company did not maintain formal board-level 

documents reflecting its decision-making, no such evidence was presented here with 

92 Id.

93 See Palantir, 203 A.3d at 752–53.

94 In re Plains All Am. Pipeline, L.P., 2017 WL 6016570, at *4 (Del. Ch. Aug. 8, 2017) 

(quoting Amalgamated Bank, 132 A.3d at 790).

95 See Pl.’s Pre-Trial Br. (D.I. 33) at 42 (citing Inter-Local Pension Fund GCC/IBT v. 

Calgon Carbon Corp., 2019 WL 479082, at *17–18 (Del. Ch. Jan. 25, 2019)).
28

respect to Bloom’s Board.

96 Thus, Jacob failed to carry his burden to prove that 

emails and other electronic communications among Company fiduciaries are 

necessary and essential to fulfill his investigative purpose. 

I will also limit Category 1 to documents more precisely related to the issues

identified in Jacob’s Demand, which, by its terms, restricts the investigatory purpose 

to “the events, circumstances, and transactions described.”97 Jacob’s Demand 

identifies as suspected mismanagement or wrongdoing only the servicing liabilities

(and related accounting issues) and the misrepresentations of Bloom’s green energy 

affinities.

98 Accordingly, Categories 1(a), (g) and (h) should be limited to the 

accounting practices flagged by Plaintiffs as prompting their Demand, namely those 

relating to MSA servicing liabilities. Category 1(f) should be limited to only those 

meetings of the Board and its committees where the Company’s relevant accounting 

practices or topics pertinent to its “green energy” claims were discussed. With those 

revisions, I find this category of documents necessary and essential to Jacob’s

96 See Calgon Carbon Corp., 2019 WL 479082, at *17; see also Palantir, 203 A.3d at 742

(ordering the production of emails only after determining that the target’s board did not 

keep formal records of its activities).

97 JX 13 (emphasis added). See Calgon Carbon Corp., 2019 WL 479082, at *17 (limiting 

production category to documents addressing transactions identified in the inspection 

demand).

98 JX 13. 
29

investigation of Bloom’s accounting and clean energy claims for which it has a 

credible basis to suspect wrongdoing or mismanagement; they should be produced.99

As for Category 2, I am satisfied, with some modifications, that these 

documents also meet the necessary and essential test. Category 2 requests

“Documents reflecting the Company’s investigation by any federal, state, or local 

government regulators or law enforcement agencies for accounting irregularities.”100

The term “Documents” is defined in the Demand to be “used in the broadest sense 

and include electronically stored information. Th[is] term[] also include[s]

accounting-related records such as audited and unaudited financial statements, 

ledgers, reports, schedules, reconciliations, valuations, pro formas, back up, or work 

papers.”101 

99 I reject Bloom’s argument that Jacob is entitled to inspect only those documents that 

were both presented to and considered by the Board. A document presented to but ignored 

by the Board that reflects the Company was engaged in improper accounting practices or 

false disclosures to the market would be relevant to an investigation of fiduciary 

wrongdoing or mismanagement. See, e.g., Stone ex rel. AmSouth Bancorp v. Ritter, 

911 A.2d 362, 369 (Del. 2006) (reiterating, in the oversight context, that a fiduciary breach 

claim can rest on allegations that the fiduciary “intentionally fail[ed] to act in the face of a 

known duty to act”). 

100 JX 13. I note the Demand defines “records” identically to “Documents,” but the term 

“records” is used only to preface the Demand’s categories (and never within any individual 

Category). For the avoidance of doubt, the term “records” should be defined identically to 

Documents as set out in this decision, and it should not apply to Category 1 (the scope of 

which is defined above through the Court’s definition of “Board Materials”).

101 Id.
30

“This court regularly orders companies to produce communications related to 

government investigations and litigation in Section 220 cases where those 

investigations supply or support a credible basis for wrongdoing.”102 Consistent 

with the limitations imposed with respect to Category 1, the scope of documents to 

be produced in response to Category 2 shall relate only to investigations of the 

servicing liabilities (and related accounting issues) and the misrepresentations of 

Bloom’s green energy affinities. Likewise, the definition of “Documents” will be 

limited to formal Board documents (e.g., minutes, resolutions, etc.) and documents 

submitted to or reviewed by the Board or senior management summarizing what the 

investigation entailed, any conclusions of investigations, and internal reports and 

follow-up reports relating to the investigation(s).

103 These documents are necessary 

and essential to reveal the degree of Bloom’s compliance with positive law and 

government regulations. 

As for Categories 3 and 4, these documents are also necessary and essential, 

albeit likely duplicative of documents responsive to Category 1. Category 3 requests 

102 Pettry, 2020 WL 6870461, at *26 (ordering that pertinent communications with 

government regulators and investigatory materials be produced for inspection in addition 

to board-level materials).

103 See Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension Tr. Fund IBEW, 95 A.3d 

1264, 1273, 1282 (Del. 2014) (affirming order requiring production of officer-level 

materials); AmerisourceBergen I, 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.”).
31

Documents reflecting the Company’s investigation of any officer or employee for 

accounting irregularities.104 And Category 4 requests Documents reflecting the 

servicing costs and liabilities that the Company expected to incur.105 There appears 

to be substantial overlap in discernable information between Category 1 and 

Categories 3 and 4: Board Materials concerning accounting irregularities should 

encompass investigations into officers and employees, which in all likelihood would 

be reviewed at the Board level. And internal documents related to expected 

servicing costs and liabilities, as submitted to the Board, would likely be captured 

by Categories 1(b) and (c). Nevertheless, for the sake of clarity, I confirm that Jacob 

is entitled to inspect non-privileged documents relating to Company investigations 

of officers and directors engaged in improper accounting practices relating to 

servicing costs and liabilities, and internal documents submitted to the Board relating 

to servicing costs and liabilities. 

III. CONCLUSION

For the reasons explained above, judgment is entered in favor of Bloom with 

respect to Bolouri’s Demand, and judgment is entered in favor of Jacob with respect 

to Jacob’s Demand. The parties shall confer regarding scope and conditions for 

104 See Pettry, 2020 WL 6870461, at *26–27.

105 Id.
32

inspection and submit either a joint or competing (with letter explanations) form of 

implementing order(s) and final judgment(s) within twenty (20) days.