UNITED TECHNOLOGIES CORP., a Delaware corporation, Defendant-Below, Appellant,
LAWRENCE TREPPEL, Plaintiff-Below, Appellee
Submitted: December 3, 2014.
Case Closed January 8, 2015.
Court Below: Court of Chancery of the State of Delaware. C.A. No. 8624-VCG.
William M. Lafferty, Esquire, D. McKinley Measley, Esquire, Morris Nichols Arsht & Tunnell LLP, Wilmington, Delaware; William Savitt, Esquire (argued), Ryan A. McLeod, Esquire, Anitha Reddy, Esquire, Wachtell, Lipton, Rosen & Katz, New York, New York, for Appellant.
Blake A. Bennett, Esquire, Cooch and Taylor, P.A., Wilmington, Delaware; Felipe J. Arroyo, Esquire (argued), Brian J. Robbins, Esquire, Julia M. Williams, Esquire, Robbins Arroyo LLP, San Diego, California, for Appellee.
Before STRINE, Chief Justice; HOLLAND, RIDGELY, and VALIHURA, Justices; COONIN, Judge,[*] constituting the Court en Banc.
STRINE, Chief Justice:
United Technologies Corp., a Delaware corporation, appeals from a judgment by the Court of Chancery holding that the court did not have the authority to impose a specific condition on a books and records inspection under § 220(c) of the Delaware General Corporation Law (DGCL). United Technologies had sought to restrict the use of any information garnered from an inspection by a shareholder, Lawrence Treppel, to legal action in a Delaware court. The Court of Chancery denied the corporation's request, determining that such a limitation " is not the type of restriction that 220(c) seeks to impose."  On appeal, United Technologies argues that the court does have the authority, under the statute itself and the line of cases interpreting it, to impose the requested limitation, and the court erred by not doing so in this case. Because the plain text of § 220 provides broad power to the Court of Chancery to condition a books and records inspection, the court erred in determining that it lacked authority under the statute to impose the requested restriction. We therefore reverse on that issue and remand so that the Court of Chancery can consider in the first instance whether, in its discretion, it should impose such a restriction based on the specific facts in this case.
On August 22, 2012, Lawrence Treppel, a United Technologies shareholder since at
least 2002, sent the company a litigation demand letter, demanding that it " investigate, address, remedy, and commence proceedings against certain officers and directors."  Treppel's claims arose out of a June 2012 investigation by the U.S. Department of Justice into violations of federal law by United Technologies in exporting software to the Chinese government for use in a military helicopter. United Technologies ultimately signed a Deferred Prosecution Agreement with the Justice Department, in which it agreed to pay $20 million and implement remedial compliance measures. The company ...