Havlicek v. Coast-to-Coast Analytical Services, Inc.

Coast-to-Coast Analytical Services, Inc. (CCAS) (defendant) was incorporated in Delaware but had no other Delaware contacts. CCAS was headquartered in California and did business and employed people there. Mary and Stephen Havlicek (plaintiffs) were two of CCAS’s five directors. After CCAS announced its intent to merge with other companies, the Havliceks, who opposed the merger, demanded access to a broad swath of company documents. CCAS limited the Havliceks’ document access based on its concern that the Havliceks would use CCAS documents to start a competing business. The Havliceks, who unsuccessfully sued to stop the merger, also requested an order allowing them to inspect CCAS’s documents. Per the Havliceks, California law gave them an absolute right to do so. CCAS responded that Delaware law applied because CCAS was incorporated in Delaware and that under Delaware law (1) the Havliceks were entitled to inspect documents only for a purpose reasonably related to their director positions and (2) the Delaware Chancery Court had exclusive jurisdiction to enforce inspection rights. Concluding that Delaware law applied, the trial court ruled that it did not have jurisdiction and denied the Havliceks’ request. The Havliceks appealed. CCAS responded that Delaware law should apply due to the internal-affairs doctrine and the United States Constitution’s Commerce and Full Faith and Credit clauses.