Opinion ID: 2556088
Heading Depth: 4
Heading Rank: 2

Heading: The McKesson HBOC Litigation

Text: The McKesson HBOC litigation is a second example. There, stockholder-plaintiffs of McKesson HBOC filed a derivative action in the Court of Chancery against certain directors of McKesson HBOC and its subsidiary, HBOC. [33] The complaint alleged breaches of fiduciary duty based on accounting irregularities arising out of a previous merger between McKesson Corporation and HBO & Company. [34] Despite having twice amended their derivative complaint, the stockholder-plaintiffs were again found to have failed to plead particularized facts establishing demand excusal. [35] Dismissing their complaint without prejudice, the Court of Chancery advised plaintiffs to use Section 220 as a tool to obtain facts necessary to plead demand futility adequately before filing a further amended derivative complaint. [36] One plaintiff (Saito) followed that advice and filed a Section 220 action demanding inspection of corporate books and records. A claimed purpose for Saito's demand was to gather information [relating to potential breaches of fiduciary duties] . . . in order to supplement [his earlier dismissed] complaint . . . in accordance with the [Court of Chancery's earlier] opinion. [37] The Court of Chancery found that purpose to be proper under Section 220, and granted Saito inspection relief. [38] Using facts gleaned from his Section 220 inspection, Saito then filed an amended complaint in the plenary derivative action, which survived a Rule 12(b)(6) motion to dismiss for failure to make a pre-suit demand under Rule 23.1. [39]