Delaware Business Litigation Report

Court of Chancery Imposes Incorporation By Reference Condition On Books and Records Production

The City Of Cambridge Retirement System v. Universal Health Services Inc., C.A. No. 2017-0322-SG (Oct. 12, 2017)

A stockholder may inspect a corporation’s records for any recognized proper purpose, including investigating alleged mismanagement. If that stockholder later files a complaint based on the records produced, must the stockholder agree that any reviewing court may consider all those records in ruling on a motion to dismiss rather than being limited to the complaint’s allegations? Under this decision, and a similar decision in the Yahoo! litigation, yes, potentially. While this decision notes that such a condition is within the Court’s discretion, the language of the opinion suggests that condition will be granted as a matter of course.

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