345 A.3d 965
Del.2025Background
- The Roberta Ann K.W. Wong Leung Revocable Trust, an Amazon stockholder, demanded to inspect Amazon’s books and records under Section 220 of the Delaware General Corporation Law, aiming to investigate alleged anticompetitive practices and possible mismanagement.
- The Trust’s demand was based on various government investigations and lawsuits (U.S. and Europe), with particular emphasis on an FTC complaint against Amazon for alleged antitrust violations.
- Amazon responded, offering some records but insisted on restrictive confidentiality conditions; the Trust refused and sued in Delaware Chancery Court.
- A Magistrate denied the Trust’s request, finding no “credible basis” for suspected wrongdoing; a Vice Chancellor also denied the demand, holding the Trust’s purpose was “facially improper” (overbroad and unclear).
- On appeal, the Delaware Supreme Court was asked to reverse these findings, focusing on whether the stated purpose was proper and whether the evidence met the credible basis standard.
- The Supreme Court found the lower court incorrectly interpreted the scope of the Trust’s purpose and that the Trust presented sufficient evidence to establish a credible basis for inspecting records.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Trust stated a proper purpose under § 220 | Purpose is to investigate specific potential anticompetitive wrongdoing; scope was sufficiently narrowed (U.S./EU; 2018+). | Stated purpose was overbroad, vague, and not “lucid”; essentially a fishing expedition. | Trust’s purpose was not facially improper; court erred in construing it too broadly. |
| Whether the Trust met the "credible basis" standard | Multiple lawsuits/investigations (notably, FTC case survived motion to dismiss) establish credible basis. | Evidence cited was weak, redundant, and no definitive wrongdoing established. | Trust met its burden—especially given FTC action, CA litigation, and EU fine. |
| Proper framework for reviewing § 220 demands | Courts must consider both the purpose and underlying evidence, not deny at first facial review. | Lower court denied demand without assessing the evidence's merits. | Court must evaluate evidence; improper to deny solely on face of demand. |
| Whether scope can be narrowed in litigation | Narrowing during litigation is allowed if it doesn’t prejudice defendant. | No explicit prejudice shown by Amazon. | Scope narrowing by Trust was permissible; no prejudice to Amazon found. |
Key Cases Cited
- Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117 (Del. 2006) (clarified proper purpose and credible basis requirement for § 220 demands)
- AmerisourceBergen Corp. v. Lebanon Cnty. Empls.’ Ret. Fund, 243 A.3d 417 (Del. 2020) (reaffirmed credible basis as the lowest burden; proper purposes for inspection)
- NVIDIA Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1 (Del. 2022) (clarified that narrowing a demand during litigation is permissible if not prejudicial)