Wilkinson v. A. Schulman, Inc., CA 2017-0138

Plaintiff Jack Wilkinson, a Schulman stockholder, sent a Section 220 demand seeking books and records to investigate alleged wrongdoing relating to the Board’s decision to accelerate vesting of restricted stock for the retiring CEO, Joseph Gingo.
Wilkinson’s demand asserted four purposes: investigate wrongdoing/mismanagement, assess Board’s independence to consider a demand, prepare a derivative suit if needed, and propose governance reforms.
The Company refused production; Wilkinson sued under 8 Del. C. § 220. The case proceeded on a stipulated paper record and a deposition of Wilkinson.
Trial evidence showed Wilkinson did not originate the asserted purposes or the categories of documents; those were drafted by counsel (Levi & Korsinsky, “L&K”). Wilkinson admitted he was motivated by the Company’s poor financial performance and that L&K conceived and pursued the Gingo-related investigation.
Wilkinson played minimal role after signing the demand: he relied on counsel for drafting the complaint, responses, and verifications, and testified that his counsel were the persons most knowledgeable about the demand’s purposes.
The Court treated whether the plaintiff’s stated purpose was the plaintiff’s actual purpose as dispositive under Section 220 and found the Company proved Wilkinson’s stated purposes were not his actual purposes.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Wilkinson satisfied § 220 by stating a proper purpose for inspection	Wilkinson (through the demand) asserted proper purposes: investigate mismanagement, prepare derivative claim, assess Board independence, propose reforms	Schulman argued the stated purposes were not Wilkinson’s actual purposes and were attorney-driven, so demand was improper	Held: Wilkinson failed to show the stated purposes were his actual purposes; demand denied
Whether a stockholder may rely on counsel-initiated purposes where the stockholder did not personally hold or verify them	Wilkinson relied on counsel’s formulation and verification; argued use of counsel is permitted under § 220	Schulman argued § 220 requires the plaintiff’s actual purpose; a nominal plaintiff cannot substitute counsel’s purposes for his own	Held: Court recognized counsel assistance is permissible but rejected attorney-driven demands when the nominal stockholder lacked the actual purpose; Wilkinson’s demand was attorney-driven and improper

CM & M Grp., Inc. v. Carroll, 453 A.2d 788 (Del. 1982) (proper purpose is paramount in § 220 actions)
Seinfeld v. Verizon Commc’ns Inc., 909 A.2d 117 (Del. 2006) (stockholder bears burden to prove proper purpose by a preponderance)
Thomas & Betts Corp. v. Leviton Mfg. Co., Inc., 681 A.2d 1026 (Del. 1996) (affirming burden on stockholder and that asserted purpose must be actual purpose)
Pershing Square, L.P. v. Ceridian Corp., 923 A.2d 810 (Del. Ch. 2007) (defendant may resist § 220 demand by showing the plaintiff’s stated purpose is not the actual purpose)