In the recent decision of Amalgamated Bank v. Yahoo! Inc., C.A. 10774-VCL (Del. Ch. Feb. 2, 2016), Vice Chancellor Laster issued a “must read” decision that ruled on whether the language of Section 220 of the DGCL (books and records demand statute) includes within its gambit electronically stored information (“ESI”).

Plaintiff Amalgamated Bank’s books and records demand sought, inter alia, the emails and electronic documents of certain Yahoo D&Os.  Yahoo objected to the request as overly broad, and objected on the grounds that Section 220 is limited to “paper records.”  The Court disagreed, ruling that while Section 220 does not include the words “electronically stored information” in the statute, “[l]imiting ‘books and records’to physical documents ‘could cause Section 220 to become obsolete or ineffective.'”  See footnote 42 of the decision which cites to various Delaware cases ordering production of ESI.

Thus, if there was any question as to whether ESI (and not just emails) are required to be produced in response to a Section 220 demand, this decision puts that question to rest.  Of course, the burden still rests with the demanding party to demonstrate that the production of such ESI is “necessary and essential” to the stated proper purpose, which is a factual issue.

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.