Richard Schoon (plaintiff) was a director, but not a stockholder, of Troy Corporation when he brought a derivative action against chief executive officer Daryl Smith, three other directors Smith elected, and Troy (together, defendants). Steel Investment Company, a corporation that owned voting stock in Troy, elected Schoon. Schoon claimed that the other directors were beholden to Smith, allowing him to entrench himself in control and thwart transactions that would benefit Troy and its other stockholders. Because Troy incorporated in Delaware, Schoon sued in Delaware Chancery Court. Meanwhile, Steel sued Troy in a separate chancery court lawsuit based on other matters and requested that Troy produce books and records. The chancery court dismissed Schoon’s lawsuit on the ground that he lacked standing to bring a derivative action because he was not a shareholder. Schoon appealed.