United Technologies Corp. v. Treppel
109 A.3d 553
| Del. | 2014Background
- UTC appeals a Chancery judgment denying a use restriction on information obtained in a § 220 inspection.
- Treppel, a UTC shareholder since 2002, sought access to books and records to evaluate the board’s denial of his litigation demand.
- UTC proposed a confidentiality agreement restricting use of inspected information to Delaware litigation; Treppel refused to promise to sue in Delaware.
- Grill previously obtained a § 220 inspection and derivative suit related to related misconduct was dismissed for lack of demand/standing.
- The Chancery court held § 220(c) did not authorize a use restriction; UTC appealed arguing broad § 220(c) authority exists and should be exercised.
- The Delaware Supreme Court reverses and remands to allow Chancery to decide, in the first instance, whether to impose such a restriction based on the record and case-specific factors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 220(c) authorizes use restrictions on inspection materials | Treppel argues restriction not authorized; UTC contends broad authority exists. | UTC asserts Court has broad discretion under § 220(c) to prescribe limitations on use. | Yes; Court has broad authority under § 220(c). |
| Whether the Court should grant the use restriction in this case | Treppel contends restriction unnecessary or improper; appeals court should defer. | UTC requests restriction to avoid misuse and ensure forum-consistent litigation. | Remanded for Chancery to decide in the first instance with case-specific factors. |
Key Cases Cited
- DV Realty Advisors LLC v. Policemen’s Annuity and Ben. Fund of Chicago, 75 A.3d 101 (Del. 2013) (recognizes § 220(c) authority to restrict use of information)
- Espinoza v. Hewlett-Packard Co., 32 A.3d 365 (Del. 2011) (context of scope of inspection; fact-specific inquiry)
- Highland Select Equity Fund v. Motient Corp., 906 A.2d 156 (Del. Ch. 2006) (illustrates balancing interests in § 220 inspections)
- Seinfeld v. Verizon Communications, 909 A.2d 117 (Del. 2006) (evolution of § 220 with respect to shareholders’ information rights)
- City of Providence v. First Citizens BancShares, Inc., 99 A.3d 229 (Del. Ch. 2014) (upholding use restrictions via forum-related considerations)