Saito v. McKesson HBOC, Inc.
Supreme Court of Delaware
806 A.2d 113 (2002)
Noel Saito (plaintiff) purchased stock in McKesson Corporation on October 20, 1998, several days after the company entered into a stock-for-stock merger agreement with HBO & Company (HBOC). The merger was completed in January 1999 and resulted in a combined company named McKesson HBOC (defendant). Several months later, McKesson HBOC announced that it was revising downward its earnings reports for the three preceding years. The revision was allegedly due to HBOC accounting errors. Saito and several others filed a shareholder derivative action against directors of McKesson Corporation (defendants) and McKesson HBOC for failing to discover HBOC’s faulty accounting prior to the merger. The court dismissed the claims without prejudice due to insufficient evidence, and suggested that the plaintiffs file a books and records action against McKesson HBOC. Saito did so, requesting records for the stated purpose of investigating possible breaches of fiduciary duty and supplementing his derivative complaint. The trial court found that Saito had a proper purpose but denied him access to several categories of documents: those created prior to his stock purchase, those created by third parties, and those created by HBOC. Saito appealed.
Rule of Law
Holding and Reasoning (Berger, J.)