Delaware Business Litigation Report

Chancery Orders an LLC to Provide Manager with Books and Records Comprising Informal Board Materials Related to Other Managers’ Actions

Bruckel v. TAUC Holdings, LLC, C.A. 2021-0579-MTZ (Del. Ch. Jan. 6, 2023)
Delaware law provides managers of an LLC with a right to inspect the company’s books and records for a purpose reasonably related to their management positions. In this Order, the Court emphasized that all managers of an LLC have equal access to the company's information.

The LLC’s operating agreement, in this case, did not restrict a manager’s default inspection rights under Section 305(b) of the Delaware LLC Act. Therefore, the Court defined the information that was reasonably related to plaintiff’s status as a manager as all the content that the other managers had access to and documents that reflected how they met and acted collectively. The Court ordered the company to produce documents related to the managers’ actions, including informal board materials, such as documents in the form of electronic mail, because those materials reflected the company’s customary management practice. The Court also stated that plaintiff’s inspection rights were ongoing and extended to post-trial materials due to the fact that managers are fiduciaries, and they must have access to the company’s books and records in order to meet their obligations. Finally, the Court indicated that fee-shifting could be appropriate in the circumstances and ordered the defendant to show cause as to why the fees should not be shifted.

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