Opinion ID: 1991103
Heading Depth: 1
Heading Rank: 5

Heading: Evidentiary Barrier Allegation

Text: In this appeal, Seinfeld asserts that the Court of Chancery's ruling erects an insurmountable barrier for the minority shareholder of a public company. [18] Seinfeld argues that: This Court and the Court of Chancery have instructed shareholders to utilize § 220 as one of the tools at hand. Yet, the Court of Chancery at bar, in requiring evidence makes a § 220 application a mirage. If the shareholder had evidence, a derivative suit would be brought. Unless there is a whistle blower, or a video cassette, the public shareholder, having no access to corporate records, will only have suspicions. [19] Seinfeld submits that by requiring evidence, the shareholder is prevented from using the tools at hand. [20] Seinfeld's brief concludes with a request for this Court to reduce the burden of proof that stockholders must meet in a section 220 action: Plaintiff submits that in a case involving public companies, minority shareholders who have access only to public documents and without a whistle blower or corporate documents should be permitted to have limited inspection based upon suspicions, reasonable beliefs, and logic arising from public disclosures. [21] After oral arguments, this Court asked the parties for supplemental briefs that would address the following questions: A. Should a stockholder with a proper purpose be entitled to inspect carefully limited categories of corporate books and records, pursuant to Section 220, upon a showing that the stockholder has a rational basis for the stated purpose and no other purpose that would militate against inspection? B. If the standard in question A would not be appropriate, is there any reduced burden of proof under Section 220 that would improve stockholders' ability to obtain the tools to pursue derivative claims without disrupting corporations' orderly conduct of business and without inappropriately interfering with corporate decision-making? If so, articulate the reduced burden of proof. If not, explain why not. We asked these questions in order to review the current balance between the rights of stockholders and corporations that is established by Thomas & Betts Corp. v. Leviton Mfg. Co. [22] and Security First Corp. v. U.S. Die Casting & Dev. Co. [23] and their progeny.