Seinfeld v. Verizon Communications., Inc. case brief

Seinfeld v. Verizon Communications., Inc. case brief summary 
909 A.2d 117

SYNOPSIS:
-Plaintiff, a stockholder, filed an action against defendant, a communications corporation, pursuant to Del. Code Ann. title 8, § 220, to compel the corporation to produce for inspection its books and records related to the compensation of three corporate officers from 2000 to 2002.
-The Court of Chancery of the State of Delaware, in and for New Castle County, granted the corporation's summary judgment motion. The stockholder appealed the judgment.

FACTS:

-The stockholder's stated purpose for seeking the corporation's books and records was to investigate mismanagement and corporate waste regarding the compensation of three corporate executives. 

-The stockholder alleged that the three executives were all performing in the same job and were paid amounts, including stock options, above the compensation provided for in their employment contracts. 

HOLDING:
-The appellate court reaffirmed the rule that stockholders seeking inspection under Del. Code Ann. title 8, § 220, had to present some evidence to suggest a credible basis from which a court could infer that mismanagement, waste, or wrongdoing may have occurred. In his deposition, the stockholder acknowledged he had no factual support for his claim that mismanagement had taken place. 

ANALYSIS:
-He admitted that the three executives did not perform any duplicative work. 

-The stockholder also admitted there was a possibility that the executive compensation amount he calculated was wrong. 

-The appellate court agreed with the trial court that the stockholder failed to state a reasonable ground for suspicion that the executives' compensation rose to the level of waste.

RULES:
-There must be a “credible basis” from which the court can infer that there is possible mismanagement or wrongdoing such that further investigation is in order.

OUTCOME: The judgment was affirmed.
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