COURT OF CHANCERY OF THE STATE OF DELAWARE LOREN MITCHELL LEONARD L. WILLIAMS JUSTICE CENTER MAGISTRATE IN CHANCERY 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734
July 31, 2025
Sarah E. Delia, Esquire Brad D. Sorrels, Esquire McCarter & English, LLP Andrew D. Cordo, Esquire 405 N. King Street, 8th Floor Nora M. Crawford, Esquire Wilmington, DE 19801 Amanda L. Day, Esquire Jacqueline G. Conner, Esquire Wilson Sonsini Goodrich & Rosati P.C. 222 Delaware Avenue, Suite 800 Wilmington, DE 19801
RE: Richard Scarantino v. The Trade Desk, Inc., C.A. No. 2025-0442-LM
Dear Counsel:
Before me is a books and records action in which the plaintiff seeks to inspect
the books and records of The Trade Desk, Inc. for the stated purpose of investigating
suspected misconduct in relation to the company’s choice to reincorporate from
Delaware to Nevada and its effect on the company’s dual-class capitalization
structure. Herein, I find that plaintiff has established a proper purpose and is entitled
to inspect the formal board materials necessary and essential to investigate
misconduct in the board’s decision to reincorporate and its effect on the
capitalization structure. I also find that the plaintiff does not have a right to the
informal board materials or the documents they have identified as being privileged. C.A. No. 2025-0442-LM July 31, 2025 Page 2 of 28
I. FACTUAL BACKGROUND1
This is a books and records action initiated by Richard Scarantino (hereinafter,
“Plaintiff” or “Mr. Scarantino”) against The Trade Desk, Inc. (hereinafter, “Trade
Desk” or “Defendant”). What follows is a brief factual background drawn from the
parties’ stipulations in the pretrial order, sixty-eight exhibits, and the argument
presented at the paper record trial held on July 16, 2025.2
A. The Parties
Trade Desk is a company that offers a cloud-based service in data-driven
advertising campaigns, that was originally a Delaware Corporation but
reincorporated in Nevada as of November 2024.3 Trade Desk was cofounded by Jeff
T. Green (hereinafter, “Mr. Green”) and David Pickles (hereinafter, “Mr. Pickles”)
in November 2009 and offered its initial public offering of stock on September 21,
2016.4 On September 23, 2016, Trade Desk filed an amended and restated certificate
1 Items filed on the docket are cited as “D.I.__” or as defined when they first appear. The Parties submitted exhibits 1– 68 are cited as “JX__.” See D.I. 30. I grant the evidence the weight and credibility I find it deserves. 2 See D.I. 29; D.I. 35. 3 D.I. 29 (“Pretrial Order”) at ¶1; see also JX 33. 4 JX 1 at 1; Pretrial Order at ¶¶3–5. C.A. No. 2025-0442-LM July 31, 2025 Page 3 of 28
of incorporation (hereinafter, the “Charter”).5 Mr. Green is the primary owner of
Class B shares.6 Mr. Scarantino is a beneficial owner of 52 shares of Trade Desk
Class A common stock, which he has continuously held since August 6, 2024.7
B. Trade Desk’s Capital Structure
Trade Desk’s common stock is divided into two classes: publicly traded Class
A common stock and non-publicly traded Class B common stock.8 Each share of
Class A stock entitles its holder to cast one vote, while each share of Class B shares
entitles its holder to cast ten votes.9 The Charter provides a dilution trigger which
causes each Class B share to convert into one Class A share upon the date that the
number of Class B shares represents less than ten percent of the aggregate number
of then outstanding Class A and Class B shares.10 Leading up to 2020, Trade Desk’s
capitalization approached this dilution trigger.11
C. Prior Litigation
5 JX 1; Pretrial Order at ¶7. 6 JX 26 at 46. 7 Pretrial Order at ¶2; JX 18. 8 Pretrial Order at ¶4; see generally JX 1 at Art. IV §C. 9 JX 1 at Art. IV §C.1(b); Pretrial Order at ¶4. 10 JX 1 at Art. V at “Final Conversion Date”; Pretrial Order at ¶8. 11 See City Pension Fund for Firefighters & Police Officers v. The Trade Desk, Inc., 2022 WL 3009959, at *3 (Del. Ch. July 29, 2022). C.A. No. 2025-0442-LM July 31, 2025 Page 4 of 28
On June 3, 2020, the board met and formed a special committee, under the
advice of legal counsel, to conduct an MFW- structured transaction to delay the
dilution trigger in order to maintain the dual class structure.12 On August 27, 2020
Mr. Green and the committee executed a term sheet outlining the elimination of the
dilution trigger and creating a date for the automatic conversion of Class B shares to
Class A shares on a 1:1 basis upon the occurrence of certain events, including
reaching December 22, 2025.13 Trade desk filed a proxy statement on October 27,
2020 with the SEC soliciting stockholder approval of the amendment to the Charter
eliminating the dilution and inserting the conversion date of December 22, 2025, and
scheduled the vote to occur at a meeting on December 7, 2020, which was adjourned
to December 22, 2020.14 A majority of unaffiliated stockholders voted at the
December 2020 meeting to approve the amendment to eliminate the dilution trigger
and provide for the conversion date.15 This 2020 amendment to the Charter that,
among other things, eliminated the dilution trigger and provided for the Final
Conversion was, in part, the subject of the litigation, City Pension Fund for
12 Pretrial Order at ¶9; City Pension Fund for Firefighters & Police Officers v. The Trade Desk, Inc., 2022 WL 3009959, at *4–5 (Del. Ch. July 29, 2022). 13 Pretrial Order at ¶10. 14 JX 3; Pretrial Order at ¶11. 15 Pretrial Order at ¶12. C.A. No. 2025-0442-LM July 31, 2025 Page 5 of 28
Firefighters & Police Officers v. The Trade Desk, Inc., which was decided on July
29, 2022, when the Court granted Trade Desk’s motion to dismiss.16
There are two other cases involving Trade Desk in recent years. One, In re
The Trade Desk, Inc. Derivative Litigation, which this Court dismissed on February
14, 2025, for failing to plead with particularity facts for which the court could infer
demand futility, which is now being considered on appeal by the Supreme Court of
the State of Delaware.17 The other, Gunderson v. The Trade Desk, Inc., which the
Court found therein that a supermajority was not necessary for the approval of
reincorporation, ruling partially favor of Trade Desk for counts I and II of the action,
and the rest of the case is still ongoing.18
D. The Reincorporation
The board of Trade Desk began holding meetings in April 2024 discussing
the reincorporation of the company to Nevada.19 The meeting minutes from the
meetings held on April 23, 2024 and July 22, 2024, indicate that the board was
considering reincorporation due to recent Delaware developments and in
16 City Pension Fund for Firefighters & Police Officers v. The Trade Desk, Inc., 2022 WL 3009959, at *23 (Del. Ch. July 29, 2022); JX 5; Pretrial Order at ¶13. 17 In re Trade Desk, Inc. Derivative Litig., 2025 WL 503015, (Del. Ch. Feb. 14, 2025). 18 Gunderson v. Trade Desk, Inc., 326 A.3d 1264, (Del. Ch. 2024). 19 JX 13; Pretrial Order at ¶14. C.A. No. 2025-0442-LM July 31, 2025 Page 6 of 28
consideration of a deck provided to board members.20 The Trade Desk’s Nominating
and Corporate Governance Committee also met on July 22, 2024 where they
discussed reincorporation after a presentation from legal counsel.21
Three special meetings were held discussing the reincorporation.22 On
September 20, 2024, the board held another special meeting at which it approved
resolutions concerning the reincorporation of Trade Desk to Nevada.23 Trade Desk
filed a Proxy statement on October 3, 2024, contemplating a special meeting with
stockholders on November 14, 2024 to vote on reincorporation. 24 The meeting and
vote was held as scheduled on November 14, 2024, and the conversion to a Nevada
corporation became effective on November 15, 2024, after the vote went in favor of
the reincorporation.25
20 JX 13; JX 15 at 4. 21 Pretrial Order at ¶16; JX 16 at 2; see also JX 17 and 20 (including the materials from this meeting). 22 Pretrial Order at ¶¶17–19; JX 19; JX 21; JX 23; see also JX 22 (including the materials from the meeting that took place on August 27, 2024). 23 See JX 24 at 2; Pretrial Order at ¶20. 24 JX 26 at 2. 25 Pretrial Order at ¶¶23–25; JX 33 at 2. C.A. No. 2025-0442-LM July 31, 2025 Page 7 of 28
E. The Demands
On October 21, 2024, Plaintiff served Trade Desk with a demand to inspect
books and records under Section 220 (hereinafter, the “Demand”).26 The Demand
was filed in response to the proposed reincorporation of Trade Desk.27 Trade Desk
responded to the Demand on October 28, 2024, disputing Plaintiff’s right to inspect
the documents he requested in his demand.28
On December 19, 2024, Trade Desk produced certain documents in response
to the Demand, including D&O questionnaires, minutes, and materials for both
special and regular board meetings, minutes, and materials for the Nominating and
Corporate Governance Committee meetings, as well as certain materials prepared
by a professor from the University of California, Berkeley School of Law who the
board retained to be consult with the board on the reincorporation.29
Plaintiff’s counsel sent an email restating the Demand on January 8, 2025 and
specifically requesting, the deck shared with the board; a copy of the professor’s
engagement letter; and board or committee materials or other records involving the
26 JX 28; Pretrial Order at ¶26. 27 JX 28 at 4–6. 28 JX 30; Pretrial Order at ¶27. 29 Pretrial Order at ¶28; JX 2; JX 20; JX 22; JX 25; JX 27. C.A. No. 2025-0442-LM July 31, 2025 Page 8 of 28
sunset of any dual class capitalization.30 Trade Desk made another production on
February 5, 2025 that included minutes from the October 22, 2024, meeting of the
board, the professors professional service agreement, and a privilege log, and then
certified that the production was complete regarding every category they agreed to
produce.31
After Trade Desk had produced 19 documents and 521 pages in response to
the Demand, Plaintiff remained unsatisfied with the production and on March 17,
2025 sent a third letter reiterating his demand for documents.32 In the March 17,
2025 letter, Plaintiff states that production was insufficient to investigate the
wrongdoing in connection with the reincorporation and making the same argument
that he continues to suspect that the reincorporation is a tool being used to perpetuate
Mr. Green’s control.33 On April 1, 2025, Trade Desk responded to Plaintiff, citing
the already robust production in response to the first two demands and claiming that
they believe they have more than complied with what is required of them under
30 JX 36. 31 Pretrial Order at ¶30; JX 29; JX 27; JX 40; JX 39 at 1 (“[W]e certify that, to the best of our knowledge and following a reasonable investigation, the Company’s production is complete[.]”). 32 JX 42. The documents produced by the Defendant up to this point are represented as JX 6–13, 15–17, 19–24, 27, and 29. Pretrial Order at ¶31. 33 JX 42. C.A. No. 2025-0442-LM July 31, 2025 Page 9 of 28
Section 220 and restating their certification in the February 5, 2025 letter that
production was complete.34 The final letter from Trade Desk also addresses the
Plaintiffs claims asserting that the provided information regarding the board’s
decision to reincorporate and the change in capital structure are proper, sufficient to
fulfill the Plaintiff’s demand, and unremarkable in the light of the changes happening
in the Delaware corporate market.35
After the filing of Plaintiff’s complaint and on the eve of trial, on July 14,
2025, Trade Desk filed a preliminary proxy to the SEC, which was submitted as an
additional exhibit.36 The preliminary proxy contemplates, in relevant part, a vote
occurring at a special meeting to approve amendments to the Articles of
Incorporation that would change the date that the Class B stock will convert to Class
A common stock.37
F. Procedural Posture
The Plaintiff filed the complaint seeking to compel the inspection of the books
and records of Trade Desk on April 24, 2025.38 Trade Desk answered the complaint
34 JX 43. 35 Id. at 1– 2. 36 D.I. 35; JX 68. 37 JX 68 at 24. 38 D.I. 1. C.A. No. 2025-0442-LM July 31, 2025 Page 10 of 28
on May 9, 2025, denying the Plaintiffs right to the relief he is seeking and arguing
failure to comply with the requirements of 8 Del. C. § 220, failure to set forth a
credible basis, lack of proper purpose, and that Plaintiff’s request is overbroad and
contains requests for privileged information.39 The parties completed their pretrial
briefing consisting of an opening brief, an answering brief, and a reply on July 9,
2025.40 A trial took place on July 16, 2025, thereafter I took this matter under
advisement.41
II. ANALYSIS
“To inspect books and records under Section 220, a plaintiff must establish
by a preponderance of the evidence that the plaintiff is a stockholder, has complied
with the statutory form and manner requirements for making a demand and has a
proper purpose for conducting the inspection.”42 “After meeting these requirements
the plaintiff must demonstrate by a preponderance of the evidence that ‘each
39 D.I. 9 at 37–39. 40 D.I. 16; D.I. 19; D.I. 32. 41 D.I. 36. 42 Pettry v. Gilead Sciences, Inc., 2020 WL 6870461, at *9 (Del. Ch. Nov. 24, 2020). C.A. No. 2025-0442-LM July 31, 2025 Page 11 of 28
category of books and records is essential to accomplishment of the stockholder’s
articulated purpose for the inspection.’”43
The parties here do not dispute Mr. Scarantino’s stockholder status as a
beneficial owner of 52 shares of Class A common stock, which he has continuously
held since August 6, 2024.44 The parties dispute the existence of a proper purpose,
the scope of production pursuant to that purpose, and Plaintiff’s right of access to
certain requested documents that are subject to attorney-client privilege. I address
each issue in turn below.
A. The Plaintiff has a credible basis to inspect the books and records of Trade Desk to investigate potential wrongdoing.
“The ‘propriety of the stockholder’s purpose’ is the ‘paramount factor in
determining whether a stockholder is entitled to inspection of corporate books and
records.”45 A proper purpose is defined as “a purpose reasonably related to such
person’s interest as a stockholder.”46 Delaware law considers the desire to
43 Lebanon Cnty. Employees.’ Ret. Fund v. AmerisourceBergen Corp., 2020 WL 132752, at *6 (Del. Ch. Jan. 13, 2020) (quoting Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026, 1035 (Del. 1996)), aff’d, 243 A.3d 417 (Del. 2020). 44 Pretrial Stipulation at ¶2; JX 18; see also JX 54– 62 (documenting Mr. Scarantino’s brokerage account statements). 45 Simeone v. Walt Disney Co., 302 A.3d 956, 966 (Del. Ch. 2023) (quoting CM & M Grp., Inc. v. Carroll, 453 A.2d 788, 792 (Del. 1982)). 46 8 Del. C. § 220(b). C.A. No. 2025-0442-LM July 31, 2025 Page 12 of 28
investigate mismanagement to be a proper purpose.47 Notably though, an allegation
of misconduct alone “without more will not entitle a stockholder to inspection.”48
“[A] stockholder seeking to investigate wrongdoing must show, by a preponderance
of the evidence, a credible basis from which the court can infer there is ‘possible
mismanagement as would warrant further investigation.”49
“The credible basis standard is ‘the lowest possible burden of proof[,]’”50 and
it does not require a plaintiff “prove that wrongdoing ‘actually occurred.’” 51 “A
stockholder need not show that corporate wrongdoing or mismanagement has
occurred in fact, but rather the ‘threshold may be satisfied by a credible showing,
through documents, logic, testimony or otherwise, that there is a legitimate issue of
wrongdoing.’”52
47 Gill v. Regency Hldgs., LLC, 2023 WL 4607070, at *13 (Del. Ch. June 26, 2023). 48 Pettry v. Gilead Sciences, Inc., 2020 WL 6870461, at *10 (Del. Ch. Nov. 24, 2020). 49 AmerisourceBergen Corp. v. Lebanon Cnty. Employees’ Ret. Fund, 243 A.3d 417, 426 (Del. 2020) (quoting Sec. First Corp. v. U.S. Die Casting & Dev. Co., 687 A.2d 563, 568 (Del. 1997)). 50 Regency Hldgs., LLC, 2023 WL at *13; (quoting Seinfeld v. Verizon Communications, Inc., 909 A.2d 117, 123 (Del. 2006)). 51 Id. (quoting Marmon v. Arbinet-Thexchange, Inc., 2004 WL 936512, at *4 (Del. Ch. Jan. 13, 2020). 52 AmerisourceBergen Corp., 243 A.3d at 426 (quoting Verizon, 909 A.2d at 123). C.A. No. 2025-0442-LM July 31, 2025 Page 13 of 28
Defendant argues that TripAdvisor has been used by Plaintiff to imply that
“reincorporation presumptively established a credible basis for wrongdoing.”53
Without mischaracterizing what the Plaintiff may or may not argue in his briefing, I
find this to be a minimization on Tripadvisor’s application to this case. This Court
is tasked at the books and records stage to determine whether the Plaintiff has “a
credible basis from which this Court may infer possible mismanagement, waste, or
wrongdoing may have occurred.”54 The footnote Plaintiff cites to in Tripadvisor
explains that the Supreme Court of Delaware applied the business judgment rule
because there “the record [] suggest[ed] the existence of a clear day and the absence
of any material, non-ratable benefits flowing to the controller or directors as a result
of the Conversions” but indicates that this conclusion may have been different had
the Defendants “taken any articulable, material steps in connection with any post-
conversion transaction” in furtherance of breaching their fiduciary duties.55
Here, considering Trade Desk’s prior decisions to delay the dilution trigger,
the most recent proxy proposing the removal of the sunset provision filed soon after
their reincorporation to Nevada, and the benefit flowing to Mr. Green as primary
53 D.I. 19 at 19; Maffei v. Palkon, 2025 WL 384054, (Del. Feb. 4, 2025) (referred to above the line as “Tripadvisor”). 54 Verizon, 909 A.2d at 122 (emphasis added). 55 Palkon, 2025 WL at *28 n. 249. C.A. No. 2025-0442-LM July 31, 2025 Page 14 of 28
owner of Class B stock, it is reasonable to have concern that the decision to
reincorporate was not made on a clear day.56 The evidence does not need to
ultimately be enough to succeed in the underlying claim, it only need be sufficient
to meet the credible basis standard, and here I find it does.57
I find TripAdvisor, for the purpose of credible basis analysis pursuant to a
books and records action, informs this Court to find the evidence presented suggests
a “legitimate issue of wrongdoing.”58 Plaintiff has therefore successfully established
a proper purpose to investigate wrongdoing in connection with the reincorporation.
B. The formal board materials relating to the capitalization structure and Mr. Green’s ownership of Class B stock are essential to Plaintiff’s purpose however plaintiff is not entitled to the production informal board materials.
After establishing a proper purpose for inspection, plaintiffs are then tasked
with showing “by a preponderance of the evidence that the books and records . . .
56 Pretrial Order at ¶11; JX 3; JX 26 at 42; JX 68. 57 “This standard does not require stockholders to show actual waste or mismanagement” and the evidence is considered collectively, meeting this standard even if it “may likely fall far short of that necessary to support an actual claim.” NVIDIA Corp. v. City of Westland Police and Fire Retirement System, 282 A.3d 1, 26 (Del. 2022) (“While this evidence likely would fall far short of that necessary to support an actual claim, we cannot say that it is insufficient to meet the lowest possible burden of proof– a credible basis from which the Court of Chancery can infer there is possible mismanagement that would warrant further investigation.”). 58 AmerisourceBergen Corp., 243 A.3d at 426 (quoting Verizon, 909 A.2d at 123). C.A. No. 2025-0442-LM July 31, 2025 Page 15 of 28
demanded are essential to [their] purpose.”59 “[E]ven if a stockholder’s purpose is
proper, Section 220 ‘does not open the door to the wide ranging discovery that would
be available in support of litigation,’ because ‘the stockholder’s inspection right is a
qualified one.’”60 “The production of records in response to a Section 220 demand
is not the equivalent of discovery in a plenary action.”61 “[W]here a section 220
claim is based on alleged corporate wrongdoing, and assuming the allegation is
meritorious, the stockholder should be given enough information to effectively
address the problem, either through derivative litigation or through direct contact
with the corporation’s directors and /or stockholders.”62
1. Plaintiff’s request for all materials relating to the dual class structure and Mr. Green’s ownership of Class B shares are necessary and essential to Plaintiff’s stated purpose.
Plaintiff argues that formal board materials relating to Mr. Green’s Class B
ownership and the sunsetting of the Trade Desk’s dual-class structure are necessary
and essential to investigate the board’s suspected breaches of fiduciary duty relating
59 Gross v. Biogen Inc., 2021 WL 1399282, at *13 (Del. Ch. Apr. 14, 2021). 60 In re Lululemon Athletica Inc. 220 Litig., 2015 WL 1957196, at *5 (Del. Ch. Apr. 30, 2015) (quoting Saito v. McKesson HBOC, Inc., 806 A.2d 113, 114 (Del. 2002)) (quoting United Techs. Corp. v. Treppel, 109 A.3d 553, 559 (Del. 2014)). 61 Woods Trustee of Avery L. Woods Tr. v. Sahara Enterprises, Inc., 238 A.3d 879, 896 (Del. Ch. 2020). 62 Saito v. McKesson HBOC, Inc., 806 A.2d 113, 115 (Del. 2002). C.A. No. 2025-0442-LM July 31, 2025 Page 16 of 28
to the reincorporation and its effect on the capitalization structure.63 I agree. The
Plaintiff’s proper purpose is to investigate wrongdoing in relation to the decision to
reincorporate, not to investigate the reincorporation alone. So, it follows that the
materials which are necessary and essential to fulfill the Plaintiff’s proper purpose
of investigating proper wrongdoing would extend to those subjects which would be
informative to the misconduct suspected.64 The wrongdoing suspected here is Mr.
Green being siphoned a benefit through the change in capitalization that was
potentially put into motion through the decision to reincorporate. Thus, the
production does not stop at material relating to the reincorporation alone but to the
misconduct of the board in relation to that decision.
I therefore must find that the Plaintiff’s request for board level materials in
relation to the board’s consideration of Mr. Green’s Class B ownership and relating
to the sunsetting of the dual class capitalization to be necessary and essential to the
investigation into any wrongdoing in relation to the board’s decision to
reincorporate.
63 D.I. 16 at 36–37. 64 See Bucks County Employees Ret. Fund v. CBS Corp., 2019 WL 6311106, at *9 (Del. Ch. Nov. 25, 2019) (finding that board level documents relating to “Plaintiff’s supported theory of wrongdoing” were “necessary and essential to allow a proper investigation of this alleged wrongdoing.”). C.A. No. 2025-0442-LM July 31, 2025 Page 17 of 28
2. The Plaintiff has failed to bring adequate evidence that would justify the production of communications beyond formal board materials.
“The starting point (and often the ending point) for an adequate inspection
will be board-level documents that formally evidence the directors’ deliberations
and decisions and comprise the materials that the directors formally received and
considered[.]”65 Broader inspection rights may be granted but only if plaintiff is able
to “introduce[] evidence indicating that atypical circumstances necessitat[e] a
broader inspection[.]”66 Examples of such circumstances are instances when the
company “did not ‘honor traditional corporate formalities’ or that ‘traditional
material, such as board resolutions or minutes’ are wanting[;]” another example is
an instance where “the plaintiff cited ‘evidence of wide-ranging
mismanagement[.]’”67
“[T]he Court of Chancery should not order emails to be produced when other
materials (e.g. traditional board-level materials, such as minutes) would accomplish
the petitioner’s proper purpose.”68 It is only in circumstances where the provided
65 Sahara Enterprises, Inc., 238 A.3d at 897. 66 Oklahoma Firefighters Pension and Retirement System v. Amazon.com, Inc., 2022 WL 1760618, at *12 (Del. Ch. June 1, 2022). 67 Id. (citing KT4 Partners LLC v. Palantir Techs. Inc., 203 A.3d 738, 742 (Del. Ch. 2019)) (quoting Freund v. Lucent Techs., Inc., 2003 WL 139766, at *5 (Del. Ch. Jan. 9, 2003)). 68 KT4 Partners LLC v. Palantir Techs. Inc., 203 A.3d 738, 752–53 (Del. Ch. 2019). C.A. No. 2025-0442-LM July 31, 2025 Page 18 of 28
materials are insufficient where the Court will order emails be produced, otherwise
it is not appropriate at the books and records stage for the Court to order its
production.69
Plaintiff argues in his final demand letter that the proxy and minutes provide
insufficient detail to the reasoning the board elected to move forward with
reincorporation when they describe the reasoning for reincorporation being due to
the unpredictability of decision making in the face of recent Delaware Court of
Chancery decisions specifically in relation to litigation involving controlling
stockholders.70 Plaintiff disagrees here with the board’s conclusions and fears
developed in response to the climate of recent decisions, but this is not a justifiable
reason to order the inspection of informal board materials when the formal board
materials have provided the information necessary to investigate the board deciding
to reincorporate and whether their intentions were nefarious.71
69 See id. at 752 (Del. Ch. 2019); see also Bucks County Employees Retirement Fund, 2019 WL at *9 (“Plaintiff is not, however, entitled to the electronic communications sought in this request, at least not in this Section 220 production. The CBS Board-level compensation documents are sufficient to enable Plaintiff’s investigative purpose.”). 70 JX 42; see JX 26 at 15 (“The increasingly litigious environment facing corporations with controlling stockholders has created unpredictability in decision-making and has started to impede our ability to act quickly.”). 71 See e.g. Walt Disney Co., 302 A.3d at 973–74 (holding that the plaintiff did not have the right to inspect three years of emails relating to a particular topic when “[t]he Board maintained formal records of its actions, and the relevant records were provided to the plaintiff”); see also Biogen Inc., 2021 WL at *15 (holding that plaintiff did not have a right C.A. No. 2025-0442-LM July 31, 2025 Page 19 of 28
Formal board level documents sufficient “to effectively address the problem”
have been provided to the Plaintiff and no further evidence has been presented to
justify the Court to order the production of informal board materials. 72 Thus, no
further production is necessary at this books and records stage because formal board
level documents satisfy those necessary and essential to the Plaintiff’s stated purpose
and no evidence was presented by the Plaintiff that support the necessity for a
broader inspection.
C. The Plaintiff fails to show that Trade Desk is obligated to produce the privileged presentations requested.
Delaware Rule of Evidence 502(b) governs attorney-client privilege, and
provides that “[a] client has a privilege to refuse to disclose and to prevent any other
person from disclosing confidential communications made for the purpose of
facilitating the rendition of professional legal services to the client . . . between the
client or the client’s representative and the client’s lawyer or the lawyer’s
representative[.]”73 “The burden of establishing privilege is on the party asserting
to inspect electronic communications because they “presented no evidence or argument that the requested informal board materials are necessary or, conversely, that the formal board materials would be insufficient for him to investigate the alleged wrongdoing.”). 72 Saito v. McKesson HBOC, Inc., 806 A.2d 113, 115 (Del. 2002). 73 D.R.E. 502(b). C.A. No. 2025-0442-LM July 31, 2025 Page 20 of 28
that privilege.”74 Once privilege is established “[t]he party seeking to invoke an
exception to the attorney-client privilege bears the burden of showing that it
applies.”75
Plaintiff claims that Trade Desk has wrongfully withheld two presentations
one from July 19, 2024, and one from August 10, 2024.76 Trade Desk argues that
these documents are protected under attorney-client privilege and work product
doctrine.77 Plaintiff does not dispute that these documents are privileged, but instead
argues that these presentations are able to be inspected pursuant to waiver, through
the Garner doctrine, and under exceptions to the work-product doctrine.78 For
reasons explained below, I do not find that Trade Desk has waived privilege and
further I do not find it appropriate to force the production of these privileged
documents.
1. Trade Desk has not waived privilege.
“[A]ttorney-client privilege ‘protects the communications between a client
and an attorney acting in his professional capacity where the communications are
74 In re Fuqua Indus., Inc., 2002 WL 991666, at *1 (Del. Ch. May 1, 2002). 75 J.P. Morgan Tr. Co. of Delaware v. Fisher, 2019 WL 6605863, at *6 (Del. Ch. Dec. 5, 2019). 76 D.I. 16 at 40; see JX 42 at 5. 77 D.I. 19 at 34–42. 78 D.I. 16 at 40–45. C.A. No. 2025-0442-LM July 31, 2025 Page 21 of 28
intended to be confidential, and the confidentiality is not waived.’”79 The Delaware
Rules of Evidence assert that “privilege conferred by [its] rules or work- product
protection” will be considered waived “if such a person … while holder of the
privilege or while entitled to work-product protection intentionally discloses or
consents to disclosure of any significant part of the privileged or protected
communication or information.”80 An exception to this rule is in circumstances
where “the disclosure itself is privileged or protected.”81 “Members of a board are
charged with ‘the proper management of the corporation’ and ‘treated as the joint
client when legal advice is rendered to the corporation through one of its officers or
directors.’”82
Plaintiff appears to argue that Trade Desk waived the ability to assert privilege
regarding the August 10, 2024, presentation because it was created by Wilson
Sonsini Goodrich & Rosati (hereinafter, “WSGR”), and they represented Plaintiff
79 DLO Enterprises, Inc. v. Innovative Chemical Prods. Gp., 2020 WL 2844497, at *3 (Del. Ch. June 1, 2020) (quoting Moyer v. Moyer, 602 A.2d 68,72 (Del. 1992)). 80 D.R.E 510(a). 81 Id. 82 SerVaas v. Ford Smart Mobility LLC, 2021 WL 5226487, at *3 (Del. Ch. Nov. 9, 2021) (quoting Moore Business Forms, Inc. v. Cordant Hldgs. Corp., 1996 WL 307444, at *4 (Del. Ch. June4, 1996)). C.A. No. 2025-0442-LM July 31, 2025 Page 22 of 28
individually in City Pension Fund.83 WSGR represented the company in connection
with the reincorporation and privilege protects communications between a client and
their attorney acting in a professional capacity;84 the August presentation was given
to Mr. Green as a board member, a joint client of the company, and therefore was
not a disclosure constituting waiver, but a communication protected under
privilege.85
The Plaintiff fails to provide evidence that Trade Desk engaged in any conduct
that would have constituted a waiver of privilege. I therefore find that the Plaintiff
does not have a right to access these documents pursuant to their argument of waiver.
2. The Plaintiff is not entitled to the privileged documents under the Garner exception.
The concept of privilege “is so fundamental to the administration of justice
that the privilege is, effectively, absolute[,]” however the Garner doctrine offers “an
exception to . . . absolute privilege . . . ‘in order to prove fiduciary breaches by those
83 D.I. 16 at 40–41; see generally City Pension Fund for Firefighters & Police Officers v. The Trade Desk, Inc., 2022 WL 3009959, (Del. Ch. July 29, 2022). 84 D.I. 19 at 35; D.I. 16 at 43 (“the board apparently retained WSGR”); D.R.E. 502(b). 85 Ford Smart Mobility LLC, 2021 WL at *3 (quoting Moore Business Forms, Inc., 1996 WL at *4). C.A. No. 2025-0442-LM July 31, 2025 Page 23 of 28
in control of the corporation upon showing good cause.’”86 In determining whether
the Garner exception applies, this Court will consider the following non-exhaustive
list of factors:
[1] the number of shareholders and the percentage of stock they represent; [2] the bona fides of the shareholders; [3] the nature of the shareholders' claim and whether it is obviously colorable; [4] the apparent necessity or desirability of the shareholders having the information and the availability of it from other sources; [5] whether, if the shareholders' claim is of wrongful action by the corporation, it is of action criminal, or illegal but not criminal, or of doubtful legality; [6] whether the communication related to past or to prospective actions; [7] whether the communication is of advice concerning the litigation itself; [8] the extent to which the communication is identified versus the extent to which the shareholders are blindly fishing; [9] the risk of revelation of trade secrets or other information in whose confidentiality the corporation has an interest for independent reasons.87
“[T]he Garner exception [is] ‘narrow, exacting, and intended to be very
difficult to satisfy.”88 Although Garner contains the extensive factors described
above to assess whether the stockholder has established “good cause,” the Court will
narrow this analysis to an “inquiry [of] three factors: ‘(i) whether the claim is
86 In re Oracle Corp. Derivative Litig., 2019 WL 6522297, at *19 (Del. Ch. Dec. 4, 2019) (quoting Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension Tr. Fund IBEW, 95 A.3d 1264, 1276 (Del. 2014)). 87 Buttonwood Tree Value Ptrs., L.P. v. R.L. Polk & Co., Inc., 2018 WL 346036, at *2–3 (Del. Ch. Jan. 10, 2018) (quoting Garner v. Wolfinbarger, 430 F.2d 1093, 1104 (5th Cir. 1970)). 88 Employees’ Ret. Sys. of Rhode Island v. Facebook, Inc., 2021 WL 529439, at *8 (Del. Ch. Feb. 10, 2021) (quoting Wal-Mart Stores, Inc., 95 A.3d at 1278). C.A. No. 2025-0442-LM July 31, 2025 Page 24 of 28
colorable, (ii) the necessity or desirability of information and its availability from
other sources and (iii) the extent to which the information sought is identified as
opposed to a blind fishing expedition.’”89 The most important of the factors being
identified as “whether the privileged information sought ‘is both necessary to
prosecute the action and unavailable from other sources[.]’”90
I will start by granting Plaintiff the first and third considerations, in that he
seems to only request a narrow production of two identified presentations and as
already discussed in my prior analysis, Plaintiff’s claim is colorable as he has
established credible basis.91 Plaintiff however fails on the middle and most important
prong requiring a showing of necessity. Despite finding above that the requested
materials relating to the sunset provision, the change in capitalization structure, and
Mr. Green’s Class B share ownership was necessary and essential to Plaintiff’s
proper purpose, I do not find the production of these privileged presentations to be
necessary because I have already ordered further production. This Court, in
Facebook, determined that this prong was not satisfied, because it had already
89 Id. at *9 (Del. Ch. Feb. 10, 2021) (quoting In re Oracle Corp., 2019 WL at *18). 90 Id. (quoting Buttonwood, 2018 WL at *5 n. 24) (noting that the dispositive nature of this prong is especially applicable to books and records actions given that the Court has already considered the necessary and essential prong required under a Section 220 action). 91 D.I. 19 at 40; see In re Lululemon, 2015 WL at *11 (finding a colorable claim existed based on the same analysis which found a credible basis pursuant to a section 220 analysis). C.A. No. 2025-0442-LM July 31, 2025 Page 25 of 28
ordered further non- privileged electronic communications, and it determined that
this further production contained the information necessary to satisfy the 220
standard “without exposing the advice of counsel.”92 For identical reasons, I find
here that Plaintiff has been granted access to non-privileged board level materials
related to the issue of the change in capitalization structure under the sunset
provision and the board’s consideration of Mr. Green’s Class B ownership in relation
to the reincorporation and this meets the necessary and essential standard under
Section 220 such that further production of privileged documents is unnecessary.
Plaintiff has failed to make a showing under the Garner doctrine that he has a
right to these privileged documents. For similar reasons, Plaintiff is also not entitled
to the privileged documents pursuant to exceptions attaching to documents protected
by the work-product doctrine.93 The presentations therefore remain protected at this
stage of litigation pursuant to privilege and under the work-product doctrine.
92 Facebook, Inc., 2021 WL at *10 (“Because Section 220 inspections must give the stockholder what is essential, but stop as what is sufficient, and Plaintiff will receive further non-privileged documents responsive to its Demand, I am satisfied Plaintiff has not carries its heavy burden to justify a court order compelling the production of documents protected by the attorney-client privilege.”). 93 The Garner doctrine is not extended to items protected as work product, however, because of their “overlap with the required showing under Rule 26(b)(3)” exceptions, the result of each analysis is often the same. Buttonwood, 2018 WL at *6 n. 28 (citing Wal- Mart Stores, Inc., 95 A.3d at 1280–81) (“For the same reasons that Garner does not apply to the privileged documents, I will not order production of documents withheld on the basis of the work-product doctrine.”). C.A. No. 2025-0442-LM July 31, 2025 Page 26 of 28
D. Plaintiff is not entitled to bad faith fee shifting.
In Delaware, courts generally follow the American rule that parties are
“expected to pay their own attorneys’ fees.”94 A court may shift fees under limited
circumstances “for bad faith conduct ‘to deter abusive litigation and to protect the
integrity of the judicial process.’”95 This Court does not invoke the bad faith
exception lightly.96 The party seeking bad faith fee shifting must satisfy “the
stringent evidentiary burden of producing ‘clear evidence’ of bad faith.”97
Plaintiff argues that Trade Desk engaged in “overly aggressive litigation
strategy” by refusing to abide by their inspection demands for reasons they claim to
be “glaringly egregious.”98 The bad faith litigation strategy that the Plaintiff is
referring to is the Defendant raising arguments of conspiracy alleging Plaintiff
engaged in dealings between his counsel and the attorneys representing other
94 Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017) (citing Montgomery Cellular Hldg. Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005)). 95 Tigani v. Tigani, 2021 WL 1197576, at *25 (Del. Ch. Mar. 30, 2021) (quoting Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017)). 96 Ravenswood Inv. Co. v. Winmill & Co., 2014 WL 2445776, at *4 (Del. Ch. May 30, 2014) (“The bad faith exception is not lightly invoked.”). 97 Dearing v. Mixmax, Inc., 2023 WL 2632476, at *5 (Del. Ch. Mar. 23, 2023) (ORDER) (quoting Beck v. Atl. Coast PLC, 868 A.2d 840, 851 (Del. Ch. 2005)). 98 D.I. 16 at 46 (quoting Seidman v. Blue Foundry Bancorp, 2023 WL 4503948, at *6 (Del.Ch., 2023) and PVH Polymath Venture Holdings Ltd. v. TAG Fintech, Inc., 2024 WL 371084, at *1–2 (Del. Ch. Jan. 31, 2024)). C.A. No. 2025-0442-LM July 31, 2025 Page 27 of 28
stockholders, however Defendant brought up no such arguments in his briefing.99
The Plaintiff states in his reply that it “maintains that fee shifting may yet prove
appropriate” but acknowledges that the Defendant did not assert in its briefing the
defense it asserted would have justified bad faith fee shifting.100 Plaintiff makes
another, more generalized, argument that Defendant refusal to produce documents
and “mischaracterization of Plaintiff’s purpose” is clear evidence of bad faith.101
Neither of these arguments are sufficient to justify bad faith fee shifting.
Plaintiff has failed to meet the standard to “produce[] clear evidence of bad faith,”
and therefore I do not find bad faith fee shifting appropriate on these bases.102
III. CONCLUSION
The Plaintiff has established a proper purpose to investigate misconduct
relating to the reincorporation of the company to Nevada and the board’s
consideration of the sunset provision and any benefit it may confer to Mr. Green as
a Class B share owner. Plaintiff is entitled to the formal board materials relating to
its proper purpose including those materials relating to the dual class capitalization
99 D.I. 16 at 45–46; D.I. 19 at 43. 100 D.I. 32 at 25 n. 94. 101 D.I. 16 at 46. 102 Dearing v. Mixmax, Inc., 2023 WL 2632476, at *5 (Del. Ch. Mar. 23, 2023) (ORDER) (quoting Beck v. Atl. Coast PLC, 868 A.2d 840, 851 (Del. Ch. 2005)). C.A. No. 2025-0442-LM July 31, 2025 Page 28 of 28
structure, the sunset provision, and Mr. Green’s Class B shares. Plaintiff has no right
to inspect email communications between board members or the two privileged
presentations.
This is my final report, and exceptions may be filed in accordance with the
expedited schedule under Court of Chancery Rule 144(d)(2).103
Respectfully submitted,
/s/ Loren Mitchell
Magistrate in Chancery
103 See Ct. Ch. R. 144(d)(2) (“A party taking exceptions must file notice of such exceptions within three days of the date of the Final Report[.]”).