Opinion ID: 2198532
Heading Depth: 2
Heading Rank: 2

Heading: The Financial Advisors' Documents

Text: The Court of Chancery denied Saito access to documents in McKesson-HBOC's possession that the corporation obtained from financial and accounting advisors, on the ground that Saito could not use § 220 to develop potential claims against third parties. On appeal, Saito argues that he is seeking third party documents for the same reason he is seeking McKesson HBOC documents  to investigate possible wrongdoing by McKesson and McKesson HBOC. Since the trial court found that to be a proper purpose, Saito argues that he should not be precluded from seeing documents that are necessary to his purpose, and in McKesson HBOC's possession, simply because the documents were prepared by third party advisors. We agree that, generally, the source of the documents in a corporation's possession should not control a stockholder's right to inspection under § 220. It is not entirely clear, however, that the trial court restricted Saito's access on that basis. The Court of Chancery decided that Saito's interest in pursuing claims against McKesson HBOC's advisors was not a proper purpose. It recognized that a secondary improper purpose usually is irrelevant if the stockholder establishes his need for the same documents to support a proper purpose. But the court apparently concluded that the categories of third party documents that Saito demanded did not support the proper purpose of investigating possible wrongdoing by McKesson and McKesson HBOC. We cannot determine from the present record whether the Court of Chancery intended to exclude all third party documents, but such a blanket exclusion would be improper. The source of the documents and the manner in which they were obtained by the corporation have little or no bearing on a stockholder's inspection rights. The issue is whether the documents are necessary and essential to satisfy the stockholder's proper purpose. In this case, Saito wants to investigate possible wrongdoing relating to McKesson and McKesson HBOC's failure to discover HBOC's accounting irregularities. Since McKesson and McKesson HBOC relied on financial and accounting advisors to evaluate HBOC's financial condition and reporting, those advisors' reports and correspondence would be critical to Saito's investigation.