14 November 2020

Court of Chancery Reminds That Rifled Precision Is a Two-Way Street

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On November 14, 2020, the Court of Chancery offered a practice pointer for any entity responding to a books and records request pursuant to Delaware law and underscored the “rifled precision” standard applicable to such inspection requests.

In a short order, Vice Chancellor Zurn granted plaintiff’s motion for summary judgment, which was partly mooted by defendants’ agreement to provide the requested books and records. The only remaining issue was how the agreed documents would be produced. Defendants sought to provide plaintiff access to 65 Bankers Boxes of paper files so that plaintiff could identify the requested materials at its own expense.

The Court rejected the approach and, in doing so, reinforced the “rifled precision” standard applicable to Section 220 requests for the production of books and records but turned that “rifle” against the producing party. Unlike discovery in the course of litigation, a books and records inspection should “satisfy” a plaintiff’s proper purpose but “stop at the quantum of information the court deems sufficient.” And this, the Court held, was a two-way street: requiring a plaintiff to “sift through dozens of boxes in search of those documents that are necessary and essential” would render “his statutory right unduly burdensome.”

While a win for plaintiff in this particular case, Ferris reminds that a books and records demand and “discovery” writ large are not the same thing. Rifled precision governs the former for plaintiffs and defendants alike.