Background
City of Pontiac Police and Fire Retirement System, Roger Smith, and George Assad brought a post-trial books-and-records action under 8 Del. C. § 220 after private-equity funds affiliated with Thoma Bravo agreed to acquire Dayforce, Inc. for approximately $12.3 billion, or $70 per share. The plaintiffs sought to investigate potential wrongdoing in the merger process, including whether Dayforce accurately disclosed discussions about founder, CEO, and board chairman David Ossip’s anticipated post-closing role.
Dayforce produced 54 documents, including formal board materials, but declined to provide other requested records. The plaintiffs sought three additional categories: informal materials concerning Ossip’s anticipated post-closing employment; informal board and officer materials addressing asserted gaps between the proxy statement and the board minutes; and short- and long-range plans and related financial forecasts reviewed by the board.
The Court’s Holding
In a post-trial final report, the Court concluded that the plaintiffs had established a proper purpose and a credible basis to investigate possible wrongdoing. Statements by Ossip and indications that Thoma Bravo wanted to retain existing management, considered alongside the proxy’s representation that no executive officer had discussed or agreed upon post-closing employment before the merger agreement was signed, supported further investigation. Asserted differences between the proxy’s account and the formal minutes also met the minimal credible-basis standard.
The Court nevertheless denied inspection of the requested informal employment communications and informal executive-session materials. Under amended Section 220(g)(2)–(3), the plaintiffs failed to prove by clear and convincing evidence a compelling need for those non-enumerated records or that the specific materials were necessary and essential. The Court granted inspection of the short- and long-range plans and related forecasts provided to and reviewed by the board at meetings on October 29, 2024, January 30, 2025, February 28, 2025, and May 2, 2025, finding them necessary and essential to evaluate the financial information available to the board.
Key Takeaways
- A proper purpose and credible basis to investigate possible wrongdoing do not automatically entitle a stockholder to every requested record.
- Under amended Section 220(g), obtaining non-enumerated records requires clear and convincing proof of a compelling need and that the specific records are necessary and essential.
- The Court ordered production of specified board-reviewed forecasts but denied access to informal communications concerning post-closing employment and executive sessions.
Why It Matters
The report applies Delaware’s amended Section 220 framework to merger-related inspection demands and illustrates the heightened burden for informal, non-enumerated materials. Even when stockholders establish a credible basis to investigate disclosure or process concerns, they must specifically prove why informal communications are indispensable.
The disposition is a post-trial final report, not an unqualified final judgment: expedited exceptions could be filed within three days under Court of Chancery Rule 144. If no exceptions were taken, the parties were directed to confer about the required production and submit a proposed implementing order.