Corporate Alert: Chancery Court Has the Authority to Restrict Use of Information Obtained in a Section 220 Books and Records Inspection

Summary: On December 23, 2014, the Delaware Supreme Court reversed a Chancery Court decision that it lacked authority to limit the use of information obtained through a books and records inspection under Section 220 of the Delaware General Corporation Law to legal action in a Delaware court. United Technologies Corp. v. Treppel (Del. December 23, 2014). Books and records inspections are frequently a precursor to derivative litigation, and in those situations—which generally do not include challenges to M&A transactions—the decision may enable corporate defendants to have choice of forum issues resolved in a Delaware court rather than through motions to dismiss in the other jurisdiction in which a case may be brought.