Hedge Fund Litigation Update: Delaware Chancery Court Denies Icahn's "Novel" Bid For Books And Records

Quinn Emanuel Urquhart & Sullivan, LLP

On November 14, 2019, Vice Chancellor Slights of the Delaware Chancery Court denied a stockholder demand—led by Carl Icahn—to inspect the books and records of Occidental Petroleum Corporation under Section 220 of Delaware General Corporation Law ("Section 220"). The demand stemmed from what Icahn referred to as Occidental's "fundamentally misguided and hugely overpriced acquisition of Anadarko Petroleum Corporation." After a half-day trial, the court found that the "primary purpose" of the demand was to aid Plaintiffs in their proxy contest, and declined to expand the scope of Section 220 for this "novel" application. The court, however, expressly left open the possibility that in the future, "this court might endorse a rule that would allow a stockholder to receive books and records relating to questionable, but not actionable, board-level decisions so that he can communicate with other stockholders in aid of a potential proxy contest."

This decision, and similar decisions in 2019, shed light on the threshold for "suspected wrongdoing" that needs to be stated for Section 220 demands to be successful and the types of documents that may be obtained (including personal emails and text messages) as a result.

Please see full Alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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