Southeastern Pennsylvania

IN THE SUPREME COURT OF THE STATE OF DELAWARE
SOUTHEASTERN PENNSYLVANIA §
TRANSPORTATION AUTHORITY, §
§ No. 239, 2015
Plaintiff Below-Appellant, §
§ Court Below: Court of Chancery
v. § of the State of Delaware
§
ABBVIE, INC., § C.A. No. 10374-VCG
§
Defendant Below-Appellee. §
Submitted: January 13, 2016
Decided: January 20, 2016
Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, Justices;
and NEWELL, Chief Judge,* constituting the Court en banc.
ORDER
This 20th day of January 2016, upon consideration of the parties’ briefs and
the record below, we find that the judgment of the Court of Chancery should be
affirmed.1 After a stipulated trial, the Court of Chancery found that the petitioner
in this § 2202 demand did not have a proper purpose because it had not shown a
credible basis for the court to infer that a non-exculpated breach of fiduciary duty
had occurred when the only use for the books and records identified by the
*
Sitting by designation under Del. Const. art. IV, § 12.
1
See Se. Pa. Transp. Auth. v. AbbVie Inc., 2015 WL 1753033 (Del. Ch. Apr. 15, 2015).
2
8 Del. C. § 220
petitioner was to help plead a later claim in litigation, when the only relief the
petitioner could identify was monetary damages,3 and when the directors who were
the potential subject of the suit were protected by an exculpatory provision
authorized by § 102(b)(7).4 Because the petitioner therefore had no viable use for
the documents it sought, the Court of Chancery denied its claim for books and
records.5 A majority of the Court—Chief Justice Strine, Justice Vaughn, and Chief
Judge Newell—affirms on the basis of the Court of Chancery’s decision of April
15, 2015, which explained that reasoning in more detail.6
3
The petitioner did not contend that it had a viable claim for injunctive relief in later litigation.
Nor did the plaintiff suggest that it had a claim against a non-fiduciary, such as against a
financial advisor for aiding and abetting, for which it was seeking books and records. Rather, its
sole object was a derivative suit for money damages against company directors and officers.
4
8 Del. C. § 102(b)(7). AbbVie argued this position to the Court of Chancery. See App. to
Opening Br. at 155 (AbbVie’s Consolidated Response to Plaintiffs’ Opening Trial Briefs, at 20)
(“As an initial matter, any derivative suit other than one for breach of the directors’ duty of
loyalty or bad faith is barred by the exculpatory provision in AbbVie's Certificate of
Incorporation.”).
5
See AbbVie, 2015 WL 1753033, at *17.
6
Justice Holland and Justice Valihura think it was unnecessary for the Court of Chancery to
reach and rely upon Section 102(b)(7) in its analysis, and given their broader substantive
concerns regarding reliance on Section 102(b)(7) in Section 220 proceedings, would affirm
solely on the basis that the petitioner did not show by a preponderance of the evidence that there
existed a credible basis to conclude that even a breach of the duty of care had been committed.
The entire panel agrees with that ground also, but the other three members of the panel believe
that it was proper for the Court of Chancery to address the matter in the precise manner that it
did, because that was the primary ground on which the defendant corporation below defended
the case and the parties framed the issues.
2
NOW, THEREFORE, IT IS ORDERED that the judgment of the Court of
Chancery is AFFIRMED.
BY THE COURT:
/s/ Leo E. Strine, Jr.
Chief Justice
3