Robert F. Moran v. Unation, Inc., a Delaware corporation

• Court: Court of Chancery of Delaware
• Decided: December 22, 2025
• Docket: C.A. No. 2025-0718-CDW
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ROBERT F. MORAN, ) ) Plaintiff, ) ) v. ) C.A. No. 2025-0718-CDW ) UNATION, INC., ) a Delaware corporation, ) ) Defendant. )

REPORT GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

Date Submitted: October 21, 2025 Date Decided: December 22, 2025

Richard Rollo, Travis S. Hunter, and Elizabeth J. Freud, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Robert A. Wilkins, LIGHTFOOT, FRANKLIN & WHITE LLC, Houston, Texas; Counsel for Plaintiff Robert F. Moran

WRIGHT, M. This spring, in the shadow of the most sweeping changes to Section 220

in at least a generation, and perhaps since its 1967 codification, a corporation

received a demand from its largest stockholder (and former CEO) seeking to

inspect corporate records for the stated purposes of investigating potential

mismanagement or wrongdoing and valuing the stockholder’s shares. The

corporation’s founder and board chair pushed back hard, denying the

propriety of the stockholder’s purposes and refusing to produce any

documents. The stockholder—like so many other jilted stockholders before

him—filed a complaint in this court. But now, rather than pushing back hard,

the corporation did nothing. It defaulted.

That default has consequences. In its 2019 opinion in KT4 Partners,

LLC v. Palantir Technologies, Inc., the Supreme Court sagely observed that a

corporation’s “good faith participation” in books-and-records litigation is

critical to the proper functioning of the process contemplated by Section 220

of the Delaware General Corporation Law.1 The reason why, the Supreme

Court explained, is that the corporation “is likely to be the only participant in

the settle-order process with knowledge of which corporate records are

1 203 A.3d 738, 756–57 (Del. 2019) (describing the Court of Chancery as “highly dependent” on this good faith participation). relevant to the [stockholder’s] proper purpose.”2 So when a corporation fails

to participate in good faith in books-and-records litigation—including by not

participating at all—it inhibits this court’s ability to determine if the

prerequisites for inspection under Section 220 have been met, including,

under its new amendments, finding by clear and convincing evidence that

specific records are necessary and essential to the stockholder’s proper

purposes.

By failing to participate in good faith, the corporation has defaulted,

and the consequence of that default is that the court takes as true all of the

well-pleaded facts in the complaint and the reasonable inferences drawn from

those facts. Doing so, on this record, establishes all of the elements necessary

under our new Section 220 for an order that awards the stockholder nearly all

of the records sought. The stockholder made a written demand under oath and

in good faith, he pleads proper purposes for inspection, he has established a

credible basis to investigate potential mismanagement or wrongdoing, the

demand identifies his purposes and the records he seeks with reasonable

particularity, the records demanded are specifically related to his stated

purposes, he is entitled to the functional equivalents of missing books and

2 Id. at 757.

–2– records where applicable, and he has demonstrated a compelling need for and

established by clear and convincing evidence that certain additional records

are necessary and essential for his stated purposes.

My reasoning follows.

I. FACTUAL BACKGROUND

The following facts are drawn from the allegations in the complaint,3

the documents it incorporates by reference, and reasonable inferences arising

from them. See Hauspie v. Stonington P’rs, Inc., 945 A.2d 584, 586, 588

(Del. 2008).

A. The Parties

Defendant Unation, Inc. is a Delaware corporation with its principal

place of business in Temple Terrace, Florida.4 Unation operates an “events

discovery” platform that allows users to discover, promote, and register and

buy tickets for events in their area.5 Plaintiff Robert F. Moran is Unation’s

largest outside stockholder6 and served as Unation’s Chief Executive Officer

from 2021 until he resigned on April 5, 2025.7

3 Dkt. 1 (“Compl.”). 4 Compl. ¶ 6. 5 Id. ¶ 8. 6 Id. ¶ 5. 7 Id. ¶ 9; id. Ex. B at *1.

–3– B. Moran and Unation Begin Their Relationship

Moran became a Unation stockholder in November 2020, when he and

Unation executed a Stock Purchase Agreement.8 Under the Stock Purchase

Agreement, Moran purchased 416,666 shares for $6 per share.9 On April 22,

2021, Moran entered into a Chief Executive Employment Agreement with

Unation, where Moran took on a full-time role as Unation’s CEO.10 In

exchange, Moran received an equity-based compensation package, including

stock warrants.11

C. Moran Becomes Concerned About Unation’s Performance

Beginning in 2023, Unation, through John Bartoletta, Chairman of the

Board of Directors, kept Moran in the dark about Unation’s operations and

financial state.12 Unation did not provide Moran—its own CEO—with

“detailed financial statements, burn rates, plans to raise capital, capitalization

tables, or other documents evidencing other funding sources.13 Despite

making multiple requests, all Moran received were assurances.14 Unation

8 Id. ¶ 10. 9 Id. 10 Id., Ex. B at *1. 11 Id. 12 Id. ¶ 11. 13 Id. 14 Id.

–4– claimed it was “financially stable, incredibly valuable, and would be

profitable in the near future[,]”15 but failed to substantiate these claims with

any “objectively verifiable” evidence.16

Sometime later, Unation engaged in another equity offering, where it

sold stock at an “‘aggressive discount’ of $3 per share.”17 Moran was

concerned about the substantial reduction in share price, and that this

additional offering “failed to include details about [Unation’s] financial

performance.”18

D. Moran Resigns and Seeks Documents

On April 5, 2025, Moran resigned from his position as Unation’s

CEO.19 In conjunction with his resignation, Moran sent Bartoletta an initial

request for books and records.20 In that request, Moran sought “the past four

years of audited financials, including balance sheets, [profit and loss

statements], and cash flow statements, as well as [Unation’s] current burn

15 Id. 16 Id. ¶ 12. 17 Id. ¶ 13. The complaint does not specify when this transaction took place. 18 Id. 19 Id. ¶¶ 9, 15. 20 Id. ¶ 15.

–5– rate.”21 Bartoletta responded to Moran’s request five days later.22 Bartoletta

disputed Moran’s characterization of the circumstances leading to Moran’s

resignation and accused Moran of failing to fulfill his duties as CEO and meet

certain performance objectives.23

On April 14, Moran followed up on his April 5 request and sought

additional books and records.24 In his follow up, Moran asked to review the

following documents:

1. Unation’s Shareholder Agreement and/or LLC Agreement.

2. Unation’s bylaws.

3. Any other corporate governance documents.

4. Unation’s [capitalization] tables25—as they currently stand as well as any changes over the last four years.

21 Id. Ex. A Ex. 1 at 2. 22 See id. Ex. B (document titled “Rebuttal Letter in response to [Plaintiff]’s Resignation Letter Date 4-5-2025” and dated April 10, 2025). 23 See id. Ex. B at *1–2. 24 Id. ¶ 17; id. Ex. A Ex. 2 at 1. 25 A capitalization (or “cap”) table is a document that explains the ownership structure of a company. It provides a detailed breakdown of the company’s equity ownership, including the types and amounts of securities issued, such as common stock, preferred stock, warrants, options, convertible securities, senior debt, and subordinated debt. See Robert R. Keatinge and Ann E. Conaway, KEATINGE & CONAWAY ON CHOICE OF BUS. ENT. Appx. C-1 (2025 ed.); Capitalization Table, INVESTOPEDIA, https://www.investopedia.com/terms/c/capitalization-table.asp (last visited Dec. 22, 2025).

–6– 5. Unation’s complete tax returns for all years of operation, including all exhibits and schedules.

6. All information that [Unation has] used to support corporate valuations over the previous two years.

7. Support for the valuation that resulted in the Company’s “equity offering at an ‘aggressive discount’ of $3 per share.”26

Bartoletta responded to Moran’s second request by letter dated April 14.27 In

his letter, Bartoletta admonished Moran for resigning and then stated that

Unation was “committed to acting in full compliance” with the law including

“responding appropriately to shareholder requests for information[.]”28

E. Moran Submits His Inspection Demand to Unation

On May 2, Moran served his demand to inspect 12 categories of

Unation’s books and records (“Demand”) on Unation’s Chairman

(Bartoletta), its chief operating officer, and its chief financial officer.29 Moran

stated he sought to inspect these records to value his investment in Unation,

and to investigate possible “mismanagement, waste, or wrongdoing[.]”30

26 Compl. Ex. A Ex. 2 at 1. 27 Id. Ex. C at *1. 28 Id. Ex. C at *2. 29 Id. ¶ 18. See also id. Ex. A at *1 (address block). Moran later served the Demand on Unation’s registered agent. Id. ¶ 18. 30 Id. ¶ 20; id. Ex. A at *7.

–7– Bartoletta responded to the Demand by letter dated May 13.31

Bartoletta disputed Moran’s claim that he “‘never received financial[]’”

statements,32 attacked Moran’s performance as CEO,33 and rejected the

Demand as “procedurally and substantively improper.”34 Bartoletta

concluded his response by stating Unation reserved the right to pursue claims

against Moran related to his role as CEO and his stock purchase, including

claims for breaches of fiduciary duty.35

II. PROCEDURAL POSTURE

On June 24, Moran filed his complaint.36 On June 27, Moran’s counsel

served the summons and complaint on Unation.37 On July 8, Bartoletta

emailed Moran’s counsel in response to receiving the complaint.38 Bartoletta

told counsel that he had “‘submitted [Unation’s] sealed response” to the

court.39

31 Id. ¶ 22; id. Ex. D at *1. 32 Id. Ex. D at *2. 33 Id. 34 Id. 35 Id. Ex. D at *4–5. 36 See id. 37 Dkt. 4. 38 Dkt. 8 ¶ 4. 39 Id. Moran says he never received the materials Bartoletta referenced in the response. Id. The filing never reached the docket either. The reason why is that

–8– On July 28, Moran filed the Motion for Default Judgment.40 Moran

served the motion on Unation the next day.41 On September 5, the court

scheduled a hearing on the motion for October 7.42 On October 1, the court

cancelled the hearing due to a scheduling conflict.43 On October 2, the court

rescheduled the hearing for October 17.44 On October 9, Moran served

Unation with a notice of the hearing for the new hearing date.45

On October 15, Bartoletta emailed court staff to request a postponement

of the hearing, claiming that a postponement was necessary to accommodate

ongoing personal medical issues and to allow him to retain Delaware counsel

for Unation, which he claimed was underway. The court declined to postpone

the hearing but converted it to a Zoom hearing so that Bartoletta could attend

and observe. The court also stated that if Unation obtained Delaware counsel

the Register in Chancery properly rejected the filing, explaining to Bartoletta that Unation cannot appear in this action without a lawyer. See File & ServeXpress Transaction No. 76610346 (explaining “You have to have counsel represent Unation, Inc. . . . [T]he filer cannot speak on behalf of Unation, Inc.”). 40 Dkt. 8. 41 Dkt. 10. 42 Dkt. 12. 43 Dkt. 15. 44 Dkt. 16. 45 Dkt. 22.

–9– before the hearing, the court would permit counsel to represent Unation at the

hearing.

On October 17, the court held the hearing.46 Present at the hearing were

Moran’s counsel and Bartoletta.47 Following Moran’s presentation, the court

asked Moran’s counsel to provide more information via letter by October 24.48

On October 21, Moran’s counsel filed a letter responsive to the court’s

request.49 I consider the matter under submission as of that date.

III. ANALYSIS

Moran submitted his Demand to Unation on May 2, 2025, five weeks

after Governor Meyer signed into law Senate Substitute No. 1 to Senate Bill

No. 21 (“SB 21”).50 Section 2 of SB 21 is a set of amendments to Section 220

of the Delaware General Corporation Law that substantially revise the entire

process—including litigation—for stockholder demands to inspect and copy

a corporation’s records.51 These amendments impact the scope of the relief

46 Dkt. 23. 47 Id. 48 Id. 49 Dkt. 24. 50 See 85 Del. Laws ch. 6. 51 Litigation challenging the constitutionality of other parts of SB 21 is on appeal to the Delaware Supreme Court, with oral argument en banc having taken place on November 5, 2025. See Rutledge v. Clearway Energy Grps., LLC, No. 248, 2025 (Del. Supr.) (“Rutledge”), Dkt. 62. The briefing in Rutledge shows that the

– 10 – the court can grant for any books and records request under Section 220, so I

pause to describe Section 220, as amended, before proceeding to consider the

motion.

Under Section 220(b), a stockholder seeking to inspect corporate

records must submit a “written demand under oath.”52 If the stockholder seeks

corporate records beyond the stock ledger or list of stockholders, Section

220(b) says three other things must also be true.53 First, the demand must be

“made in good faith and for a proper purpose.”54 Second, the demand must

challenge targets sections 1 and 3 of SB 21—the amendments to 8 Del. C. § 144 and SB 21’s retroactivity language, respectively. See Rutledge, Dkts. 9, 15, 27, 30, 44, 47, 48, 56, 58. Moran sent the Demand on May 2, 2025, after Governor Meyer signed SB 21 into law on March 25, so neither section 1 nor the retroactivity language in section 3 is at issue here. See 85 Del. Laws ch. 6, § 3 (“Sections 1 and 2 of this Act take effect on the enactment of this Act and apply to all acts and transactions, whether occurring before, on, or after the enactment of this Act[.]”). The Supreme Court’s disposition of the appeal should therefore not impact the amendments to Section 220, at least as they apply to demands, like Moran’s, made after Governor Meyer signed SB 21 into law, because section 1 and the retroactivity language in section 3 appear to be severable. See Newark Landlord Ass’n v. City of Newark, 2003 WL 22724663, at *2 (Del. Ch. Nov. 17, 2003) (“The valid segment of the statute or ordinance may stand alone, however, when severance of the invalid provision results in ‘a residual component having separate purpose and independent legislative significance.’”) (quoting Matter of Oberly, 524 A.2d 1176, 1182 (Del. 1987)); see also 1 Del. C. § 308 (“If any provision of this Code or amendments hereto . . . is held invalid, such invalidity shall not affect . . . such amendments that can be given effect without the invalid provisions or application, and to this end the provisions of this Code and such amendments are declared to be severable.”). 52 8 Del. C. § 220(b)(1). 53 Section 220(b)(2) is a new addition to Section 220 made by SB 21. See 85 Del. Laws ch. 6 § 2. 54 8 Del. C. § 220(b)(2)a.

– 11 – describe “with reasonable particularity the stockholder’s purpose and the

books and records the stockholder seeks to inspect.”55 Third, the “books and

records” the stockholder seeks to inspect must be “specifically related to the

stockholder’s purpose.”56

If the corporation refuses to permit inspection or does not reply to the

demand within five business days, Section 220(c) allows the stockholder to

then file suit seeking an order to compel that inspection, and if the stockholder

proves that they are a stockholder and that they have met Section 220(b)’s

requirements, the court may order the production of nine categories of

statutorily defined “books and records.”57 If the stockholder proves they have

satisfied Section 220(b)’s requirements but the corporation does not have

certain categories of “books and records”—specifically, minutes of

stockholder, board, or board committee meetings; written consents evidencing

stockholder action without a meeting; annual financial statements; or director

independence questionnaires (for publicly held corporations)—the court may

order the corporation to produce the “functional equivalent” of the missing

55 8 Del. C. § 220(b)(2)b. 56 8 Del. C. § 220(b)(2)c. 57 8 Del. C. § 220(c). Section 220(c) also adds a requirement that the stockholder establish the inspection is for a proper purpose, but this is redundant with Section 220(b)(2)’s requirement that the demand be “in good faith and for a proper purpose.” Compare 8 Del. C. § 220(b)(2)c., with 8 Del. C. § 220(c)(3).

– 12 – books and records, but “only to the extent necessary and essential to fulfill the

stockholder’s proper purpose.”58

If a stockholder wants more than this—if they seek to inspect corporate

records beyond the stock ledger, list of stockholders, and the statutorily

defined “books and records” (or their functional equivalents in certain

cases)—the stockholder has a heavier burden. First, the stockholder must

satisfy Section 220(b).59 Second, the stockholder must show a “compelling

need” to inspect these additional corporate records.60 Third, the stockholder

must show by “clear and convincing evidence” that “such specific records are

necessary and essential to further such purpose.”61

The procedural posture of this case—a motion for default judgment—

adds another layer to the court’s analysis.62 Under Court of Chancery Rule

55, when a party “has failed to appear, plead, or otherwise defend” the court

58 8 Del. C. § 220(f). 59 8 Del. C. § 220(g)(1). See also supra nn.50–56 (describing the requirements of Section 220(b)). 60 8 Del. C. § 220(g)(2). 61 8 Del. C. § 220(g)(3). 62 As described in the Part I of this Report, Moran served the complaint on Unation on June 27, 2025. See Dkt. 4. Unation was required to serve an answer or file a responsive motion by July 17. See Ct. Ch. R. 12(a)(1)(A); Dkt. 4. No counsel appeared on behalf of Unation, and Unation did not respond to the complaint in the 112 days between being served and the hearing. Dkts. 4, 23. Moran then moved for entry of default judgment under Court of Chancery Rule 55. Dkt. 8.

– 13 – may enter judgment for the moving party.63 “The effect of a default [is] . . .

to deem admitted all the well-pleaded facts in the complaint.” Hauspie v.

Stonington Partners, Inc., 945 A.2d 584, 586 (Del. 2008) (collecting cases).

A movant is only entitled to a default judgment if those facts state a claim

upon which relief can be granted. Id. at 586 (citing Nishimatsu Constr. Co. v.

Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). But “[a] default

is not treated as an absolute confession by the defendant of his liability and of

the plaintiff’s right to recover . . . . Although he may not challenge the

sufficiency of the evidence, [the defendant] is entitled to contest the

sufficiency of the complaint[.]” Id. at 587 (quoting Nishimatsu, 515 F.2d at

1206). To that end, “entry of a default judgment requires strict conformity

with all procedural requirements,” including heightened pleading standards

when they apply. Id. at 587 (collecting cases).

With this procedural standard in mind, I now consider how the Demand

fits within the new Section 220 framework created by SB 21, whether Moran

is entitled to inspect and copy Unation’s records, and, if so, which records.

63 Ct. Ch. R. 55(b).

– 14 – A. Moran is Entitled to Inspect and Copy Unation’s Records Because He Has Satisfied the Requirements of Section 220(c)

Section 220(c), as explained above, describes the requirements to

compel a corporation to produce books and records in response to a demand.

To prevail in an inspection action, a plaintiff must show that they are a

stockholder, that they complied with the requirements in Section 220(b), and

that the defendant either refused to allow the plaintiff to inspect the records

sought or failed to respond to the demand within five business days. See 8

Del. C. § 220(c). I address each of these in turn.

1. The Allegations of the Complaint are Sufficient to Establish Moran is a Stockholder of Unation

The complaint alleges that Moran is Unation’s “largest stockholder,”64

as does the Demand.65 These allegations are enough, for purposes of a motion

for default judgment, to satisfy Section 220(c)(1)’s requirement that Moran

establish he is a stockholder of Unation.66

64 Compl. ¶¶ 5, 10. 65 Id. Ex. A. Included with the Demand is a copy of the Stock Purchase Agreement by which Moran acquired a portion of his shares, and correspondence purportedly from Unation that does not dispute Moran’s stockholder status. 66 8 Del. C. § 220(c)(1); see Hauspie, 945 A.2d at 586.

– 15 – 2. The Allegations of the Complaint are Sufficient to Establish that Moran Has Satisfied the Requirements in Section 220(b) for Demanding Inspection

Section 220(c)(2) requires Moran to establish that he has complied with

the form and manner requirements for demanding inspection of corporate

books and records, which are set forth in Section 220(b). The allegations of

the complaint are sufficient to establish that Moran has met his burden here.

a. Moran Made a Written Demand Under Oath

The complaint alleges that Moran submitted a written demand under

oath to Unation,67 and attaches that demand as an exhibit.68 This satisfies the

requirements of Section 220(b)(1).

b. The Demand Was Made in Good Faith and for Proper Purposes

The allegations of the complaint also show that the Demand was made

in good faith. The complaint alleges that when Moran was Unation’s CEO,

he was “kept in the dark” about Unation’s operations and was not provided

financial statements, and that Unation never provided detailed information

about its financial status to Moran or potential investors.69 This is sufficient,

67 Compl. ¶¶ 2, 18; 8 Del. C. § 220(a)(5) (defining “under oath”). 68 Compl. Ex. A. 69 Id. ¶ 11.

– 16 – on a motion for default judgment, to show that Moran made the Demand in

good faith.

The allegations of the complaint also show that Moran has proper

purposes for inspecting Unation’s books and records. Section 220 defines a

“proper purpose” as “a purpose reasonably related to a stockholder’s interest

as a stockholder.” 8 Del. C. § 220(a)(2).70 Delaware law recognizes a variety

of purposes that are reasonably related to a person’s interest as a stockholder,

including valuing one’s ownership interest and investigating possible waste,

mismanagement, or breaches of fiduciary duty.71 The Demand states that

Moran’s purposes are to value his stock holdings and investigate possible

mismanagement.72 This satisfies Section 220(b)(2)a.

c. The Demand Describes Moran’s Purpose and the Records Sought with Reasonable Particularity

As previously noted, newly incorporated into Section 220 is a

requirement that a demand describe with “reasonable particularity” both the

70 This definition of “proper purpose” is not new—it was relocated from the end of Section 220(b)(5) to new Section 220(a)(2). See 85 Del. Laws ch. 6. 71 Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery (“Wolfe & Pittenger”) § 9.07[e][1] (T. Brad Davey et al. eds., 2d ed., 2024) (collecting cases). 72 Compl. Ex. A at *1.

– 17 – stockholder’s purpose and the books and records the stockholder seeks. 8 Del.

C. § 220(b)(2)b.73

“When interpreting a statute, ‘the fundamental rule is to ascertain and

give effect to the intent of the legislature.’” Tesla Inc. v. Del. Div. of Motor

Vehicles, 297 A.3d 625, 631 (Del. 2023) (quoting Delmarsh, LLC v. Env’t

Appeals Bd., 277 A.3d 281 (Del. 2022)). “A threshold determination is

‘whether the provision in question is ambiguous.’” Reybold Venture Gp. IX,

LLC v. Summit Plaza Shopping Ctr., LLC, 2025 WL 658760, at *6 (Del. Ch.

Feb. 28, 2025) (quoting Dewey Beach Enter., Inc. v. Bd. of Adjustments of the

Town of Dewey Beach, 1 A.3d 305, 307 (Del. 2010)). This inquiry begins

with the text. Tesla, 297 A.3d at 631. “A statute is ambiguous if ‘it is

reasonably susceptible of different conclusions or interpretations’ or ‘if a

literal reading of the statute would lead to an unreasonable or absurd result

not contemplated by the legislature.’” LeVan v. Indep. Mall, Inc., 940 A.2d

929, 933 (Del. 2007) (quoting Newtowne Vill. Serv. Corp. v. Newtowne Rd.

73 The concept of “reasonable particularity” in books and records actions is not entirely unfamiliar. The requirement arguably existed in Section 220 even before Section 220(b)(2)’s enactment. See Benjamin v. Island Mgmt. Co., 267 A.3d 19, 32 n.33 (Conn. 2021) (“[Section 220] does not expressly limit inspection to records directly connected to the purpose advanced or require reasonable particularity in the demand, but Delaware courts have effectively adopted these requirements as part of the proper purpose requirement.”) (citing Sec. First Corp., 687 A.2d at 569 (Del. 1997)).

– 18 – Dev. Co., 772 A.2d 172, 175 (Del. 2001)). “If a statute is plain and

unambiguous, ‘the court’s role is limited to applying the literal meaning of the

statute’s words.’” Reybold Venture Gp., 2025 WL 658760, at *6 (quoting

1001 Jefferson Plaza P’rship, L.P. v. New Castle Cnty. Dep’t of Fin., 695

A.2d 50, 52 (Del. 1997)) (cleaned up).

There are several rules courts follow when interpreting ambiguous

statutes:

[E]ach part or section [of a statute] should be read in light of every other part or section to produce [a] harmonious whole. Undefined words in a statute must be given their ordinary, common meaning. Additionally, words in a statute should not be construed as surplusage if there is a reasonable construction which will give them meaning, and courts must ascribe a purpose to the use of statutory language, if reasonably possible.

Oceanport Indus., Inc. v. Wilm. Stevedores, Inc., 636 A.2d 892, 900 (Del.

1994) (citations omitted). “‘When a statute [or rule] has been applied by

courts and state agencies in a consistent way for a period of years, that is

strong evidence in favor of that interpretation.’” Reybold Venture Gp., 2025

WL 658760, at *6 (quoting State v. Barnes, 116 A.3d 883, 890 (Del. 2015)).

The General Assembly did not define “reasonable particularity” in

Section 220, and I am unaware of any court having construed this part of the

new Section 220. But this does not mean that the path forward is unlit, as

– 19 – there are other authorities that provide some illumination as to what

“reasonable particularity” means.

i. Discovery to Establish Personal Jurisdiction Under Court of Chancery Rule 12(b)(2)

The first guiding beacon exists in caselaw evaluating when a plaintiff

is entitled to discovery to establish a court’s ability to exercise jurisdiction

over a non-resident defendant.74 To be entitled to jurisdictional discovery, a

plaintiff must present “factual allegations that suggest with reasonable

particularity the possible existence of the requisite contacts between the

parties and the forum state . . . .” Green Am. Recycling, LLC v. Clean Earth,

Inc., 2021 WL 2211696, at *6 (Del. Super. June 1, 2021) (quoting CLP

Toxicology, Inc. v. Casla Bio Holdings LLC, 2020 WL 3564622, at *15 (Del.

Ch. June 29, 2020)) (emphasis added). When applying this test, courts have

held that a plaintiff’s allegations were reasonably particular if they “explain

how discovery would provide the ‘something more’ needed to establish

personal jurisdiction.” CLP Toxicology, 2020 WL 3564622, at *15 (quoting

Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003)).75 The

74 Wolfe & Pittenger § 3.02 (collecting cases). 75 The Third Circuit has used this test for over 30 years. See Mellon Bank (East) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1223 (3d Cir.1992).

– 20 – purpose is to avoid “inappropriately condon[ing] a dragnet ‘fishing

expedition’ unmoored from a good faith objective.” Green America

Recycling, 2021 WL 2211696, at *6 (quoting CLP Toxicology, 2020 WL

3564622, at *15).

Applying this language in the context of Section 220, a demand would

satisfy the “reasonable particularity” requirement if it demonstrates how the

books and records sought would satisfy the stockholder’s stated purpose but

prevent an overly intrusive fishing expedition or condone a request made in

bad faith.

ii. The Model Business Corporation Act

Another guide is the Model Business Corporation Act.76 Section

220(b)(2) is nearly identical to Section 16.02(c) of the Model Act,77 so the

court looks to cases in the states that have adopted the Model Act for possible

guidance.78

76 MODEL BUS. CORP. ACT. (A.B.A. 2025), https://www.americanbar.org/content/ dam/aba/administrative/business_law/corplaws/mbca-202504.pdf (“Model Act”). 77 Compare 8 Del. C. § 220(b)(2), with Model Act. § 16.02(c). The only differences are Section 220(b)(2)c.’s use of “specifically related to” instead of Model Act Section 16.02(c)(3)’s use of “directly connected with,” and the Model Act’s use of “shareholder” versus Section 220’s use of “stockholder.” 78 There is commentary confirming that the Model Act was a reference point in the drafting of SB 21. See John Mark Zeberkiewicz and Brian Mammarella, The DGCL’s Newly Enacted Safe Harbor Procedures and Books and Records Regime, 39 INSIGHTS: THE CORP. AND SEC. L. ADVISOR 6–7 (June 2025) (explaining that

– 21 – As explained by the Connecticut Supreme Court, quoting an Illinois

appellate court, “the particularity requirement . . . is a relative one, turning on

the degree of knowledge that a movant in a particular case has about the

documents he requests . . . . [T]he shareholder’s request must be sufficient to

apprise a [person] of ordinary intelligence what documents are required,

depending on the facts and circumstances of each case.” Benjamin v. Island

Mgmt. Co., 267 A.3d 19, 41–42 (Conn. 2021) (quoting Sunlitz Hldg. Co.,

W.L.L. v. Trading Block Hldgs., Inc., 17 N.E.3d 715, 722 (Ill. Ct. App.),

appeal denied, 21 N.E.3d 719 (Ill. 2014)).79 The particularity requirement

“directs a shareholder to express his purpose with sufficient particularity so

that the reason for the inspection can be ascertained by the corporation, but

that minute detail of purpose is not required.” Pagett v. Westport Precision,

Inc., 845 A.2d 455, 463 (Conn. App. Ct. 2004).

paragraphs (a)(1) and (b)(4) of Section 220 are consistent with the corresponding provisions of the Model Act). 79 See also Parsons v. Jefferson–Pilot Corp., 426 S.E.2d 685, 691 (N.C. 1993) (“Whether a shareholder has described his purpose or the desired records with reasonable particularity necessarily depends upon the facts and circumstances of each case.”). The North Carolina Supreme Court, noting that “no court has yet construed the ‘reasonable particularity’ requirement” following North Carolina’s enactment of Section 16.02 of the Model Act, reached this conclusion after looking at how courts have interpreted the “reasonable particularity” requirement in Rule 34 of the Federal Rules of Civil Procedure. Id.

– 22 – iii. Rule 34 of the Court of Chancery Rules and the Federal Rules of Civil Procedure

Another source of illumination is the Court of Chancery Rules and the

Federal Rules of Civil Procedure (“Federal Civil Rules”). Both include the

term “reasonable particularity” in their respective Rule 34. Compare Ct. Ch.

R. 34(b), with Fed. R. Civ. P. 34. Specifically, Rule 34 in each requires a

party requesting the “[p]roduction of documents” from another party in

discovery context to describe the individual items or categories of items

sought with “reasonable particularity.” Ct. Ch. R. 34; Fed. R. Civ. P. 34. The

term has not appeared often in this court’s decisions, and has yet to be defined

when it has graced the pages of this court’s opinions and orders.80 But the

Court of Chancery Rules are much like the Federal Civil Rules, and this court

has often looked to the Federal Civil Rules to guide its interpretation of the

Court of Chancery Rules,81 so I will do the same.

80 A Westlaw search for Delaware cases citing Court of Chancery Rule 34 show the term appearing in two opinions (Gross v. Biogen Inc., 2021 WL 1399282, at *18 (Del. Ch. Apr. 14, 2021) (quoting the parties’ pretrial order) and Highland Select Equity Fund, L.P. v. Motient Corp., 906 A.2d 156, 166 n.47 (Del. Ch. 2006)) and one form of implementing order drafted and submitted by the parties (In re Dura Medic Hldgs., Inc., 2022 WL 17884178, at *3 n.3 (Del. Ch. Dec. 22, 2022) (ORDER)). 81 See, e.g., Terramar Retail Centers, LLC v. Marion #2-Seaport Tr. U/A/D June 21, 2002, 2018 WL 6331622, at *9 n.53 (Del. Ch. Dec. 4, 2018) (citing Plummer v. Sherman, 861 A.2d 1238, 1242 (Del. 2004) (“Because the Court of Chancery Rules are patterned on the Federal Rules of Civil Procedure, it is appropriate to look to federal authorities for guidance.”).

– 23 – Fortunately, federal case law on this subject is expansive. The United

States Supreme Court interpreted this language in Consolidated Rendering

Co. v. Vermont, when it granted certiorari to consider if documents sought in

a discovery request were “described with the particularity required” in the

Federal Civil Rules. 207 U.S. 541, 554 (1908). In Consolidated Rendering,

the justices held that if a discovery request listed “books, papers, and

correspondence . . . which related to the subject of the inquiry, and were

described with reasonable detail,” the listed documents should be produced.

Id. at 554. The United States Supreme Court also expressly rejected the theory

that an inquiring party must “designate each particular paper which is desired”

because that “presupposes an accurate knowledge of such papers” which an

investigating party would rarely, if ever, have. Id.

The justices further refined the definition in Brown v. United States.

276 U.S. 134 (1928). The issue presented in Brown was whether a discovery

request that demanded “[a]ll letters or copies of letters, telegrams, or copies

of telegrams, incoming and outgoing” for a period of three-and-a-half years,

and discussing 18 topics, described the records sought with “reasonable

particularity.” Id. at 142–43. The justices distinguished the discovery request

in Brown from a subpoena in Hale v. Henkel, which demanded a witness

produce “all communications” between a corporation and six other

– 24 – companies, all of its “reports and accounts[,]” and all letters it received from

more than a dozen other companies from the date of its incorporation to the

present. Id. at 142 (discussing Hale v. Henkel, 201 U.S. 43, 76–77 (1906)).

The Brown court determined that the request described the records with

reasonable particularity because it identified communications discussing a

certain set of topics over a reasonable time period, unlike the expansive and

unspecific subpoena in Hale. Id.

Federal courts continued to refine the term in light of the U.S.

Supreme Court’s guidance in Consolidated Rendering and Brown after the

amendments to the Federal Civil Rules in 1970.82 Now “a request for

inspection . . . must designate the things [the litigant] wishes to inspect.” 8B

WRIGHT & MILLER’S FEDERAL PRACTICE & PROCEDURE (“Wright & Miller”)

§ 2211 (3d ed. 2025). “Particularity of designation . . . is a matter of degree,

dependent upon a pragmatic consideration of the circumstances in each case.”

Id.

The test is a relative one, based on the knowledge a movant has about

the records they seek. Id. According to Wright & Miller, courts have found

“generalized designation[s]” sufficient when the party seeking discovery

82 See generally The Sedona Conference, Primer on Crafting eDiscovery Requests with “Reasonable Particularity,” 23 SEDONA CONF. J. 331, 341 (2022); 8B WRIGHT & MILLER’S FEDERAL PRACTICE & PROCEDURE § 2211 (3d ed., 2025).

– 25 – cannot provide a more detailed description and the opposing party will “have

no difficulty in understanding what is wanted.” Id. (collecting cases) . “The

goal [appears to be] that the designation be sufficient to apprise a person of

ordinary intelligence what documents are required and that the court be able

to ascertain whether the requested documents have been produced.” Id.83 It

“does not require the impossible.” Id.

The court also found one Delaware Superior Court case addressing the

meaning of “reasonable particularity” under Rule 34 of the Superior Court

Rules of Civil Procedure, and the court in that case relied upon an earlier

edition of Wright & Miller to reach a similar conclusion about the scope of

Rule 34’s “reasonable particularity” requirement: “The accepted standard is

whether a reasonable person would know what documents are referred to in

the request.” Nat’l Union Fire Ins. v. Stauffer Chem. Co., 1990 WL 177572,

at *2 (Del. Super. Nov. 9, 1990) (citing C. WRIGHT & A. MILLER, FEDERAL

83 See also Reagan-Touhy v. Walgreen Co., 526 F.3d 641, 649–50 (10th Cir. 2008) (applying the “ordinary intelligence” test to assess the breadth of discovery requests under Rule 34); Cardenas v. Dorel Juv. Grp., Inc., 230 F.R.D. 611, 623 (D. Kan 2005) (holding document requests were not particular enough if they required “‘the respondent either to guess or move through mental gymnastics’” to determine what documents “‘may conceivably contain some detail . . . within the scope of the request.’”) (quoting Audiotext Comms. v. U.S. Telecom, Inc., 1995 WL 18759, at *1 (D. Kan. Jan. 17, 1995)); Mailhoit v. Home Depot U.S.A., Inc., 285 F.R.D. 566, 571–72 (C.D. Cal. 2012) (stating a request is not “reasonably particular” if it “does not provide sufficient notice to the responding party of what should be considered responsive material” and may require the production of irrelevant materials).

– 26 – PRACTICE AND PROCEDURE: CIVIL § 2211 at 631 (1970); 4A MOORE’S

FEDERAL PRACTICE ¶ 34.07 at 34–42 (1990) (citing Temple Univ. v. Salla

Bros., 656 F. Supp. 97 (E.D. Pa. 1986))).

* * *

Considering these authorities together, a single theme emerges: the

“reasonable particularity” requirement does not impose a high threshold. So

long as a demand enables the receiving corporation to understand why the

stockholder seeks inspection and what sort of documents it needs to look for,

the “reasonable particularity” requirement is satisfied. I adopt that standard

here.

Applying this standard, I conclude that the well-pleaded facts in the

complaint demonstrate that the Demand identifies with reasonable

particularity why Moran seeks inspection and the records he seeks. As to the

former, the complaint and the Demand adequately explain why Moran seeks

inspection.84 As to the latter, ten of the twelve categories of records identified

in the Demand are plainly stated, either in the Demand itself85 or as clarified

by counsel during oral argument,86 and Unation should have no difficulty

84 See Compl. ¶¶ 11–16, 20; id. Ex. A at 1, 5. 85 See id. ¶ 21; id. Ex. A at 5–6. This includes Categories 1–3, 5–6, and 9–12. 86 See id. ¶ 21; id. Ex. A at 6. This is Category 4.

– 27 – finding these documents. As for the remaining two categories of records

(Categories 7 and 8), I find that they are stated with reasonable particularity.

Both categories seek records used by Unation to support certain corporate

valuations performed by Unation, so Unation should be well-positioned to

know what records were used in the valuation process. It would be

unreasonable to expect a stockholder who was not involved in performing

those valuations to identify the records sought with any greater particularity.

d. The Books and Records Sought in the Demand are Specifically Related to Moran’s Stated Purposes

Section 220(b)(2) imposes a third requirement: the books and records

sought must be “specifically related” to the stockholder’s stated purpose(s).87

This is another new and undefined addition to Section 220. It is unclear what

“specifically related” means here and, as one commentator has noted, the

uncertainty is magnified by Section 220(a) defining a “proper purpose” as “a

purpose reasonably related to a stockholder’s interest as a stockholder.”88 As

with Section 220(b)(2)b.’s “reasonable particularity” requirement, I seek

87 8 Del. C. § 220(b)(2)c. 88 Daniel Meyer, Blunting the “Tools at Hand”: Recent Developments in Delaware Books-and-Records Demand Law, 33 UNIV. MIA. BUS. L. REV. 387, 398 n.40 (2025).

– 28 – illumination from other jurisdictions to tease out the meaning of “specifically

related” in Section 220(b)(2)c.

Turning first to the Model Act, I note that the Model Act uses slightly

different language to describe how tightly the documents sought by a demand

must relate to a stockholder’s purpose. Section 220 uses the phrase

“specifically related” while the Model Act uses “directly connected.”89 It is

unclear why the General Assembly did this,90 and one strain of statutory

construction says I should ascribe intent to this drafting choice,91 which

counsels against relying on judicial interpretations of the Model Act’s

“directly connected.” But our caselaw requires that courts give undefined

words their “ordinary and common meaning[,]”92 and there is at least one

dictionary authority suggesting that “specific” and “direct” can be

89 Contrast 8 Del. C. § 220(b)(2)c., with Model Act § 16.02(c)(3). 90 A review of publicly available hearings and debate on SB 21 reflect no discussion of this specific language. 91 E.g., Clark v. State, 65 A.3d 571, 577–78 (Del. 2013) (quoting Sussex Cnty. Dept. of Elections v. Sussex Cnty. Republican Cmte., 58 A.3d 418, 422 (Del. 2013)); Dep’t of Nat. Res. and Env’t Control v. McGinnis Auto & Mobile Home Salvage, LLC, 2019 WL 851935, at *5 (Del. Super. Feb. 21, 2019) (citing 2A SUTHERLAND STATUTORY CONSTRUCTION § 46:3 (7th ed.)), rev’d on other grounds, 225 A.3d 1251 (Del. 2020). 92 E.g., Reybold Venture Gp., 2025 WL 658760, at *6 (quoting Oceanport Indus., 636 A.2d at 900).

– 29 – synonyms,93 which counsels in favor of at least considering those

authorities.94

The few judicial decisions construing the contours of “directly

connected” have applied a soft standard, finding requested records to be

“directly connected” to a stockholder’s purpose if the records are “relevan[t]”

to the purpose or there is a “correlation” between the two. See, e.g., Benjamin

v. Island Mgmt., LLC, 267 A.3d 19, 40 (Conn. 2021) (“the plain meaning of

‘direct connection[]’ . . . is more suggestive of relevance than indispensable

need”), 41 (citing Pagett, 845 A.2d 455 for the proposition that records are

“directly connected” to the stockholder’s purpose when there was “a

correlation” between the stated purpose and the documents requested). But

the Connecticut Supreme Court reached this conclusion in Benjamin by

considering and then rejecting what it described as Delaware’s “strict

necessity” test. 267 A.3d at 40 (“We recognize that Delaware applies a strict

necessity test” and quoting Sec. First Corp. v. U.S. Die Casting & Dev. Co.,

687 A.2d 563, 569 (Del. 1997)).

93 Specific, MERIAM- WEBSTER THESAURUS, https://www.merriam-webster.com/thesaurus/specific (last visited Dec. 22, 2025). 94 “Because dictionaries are routine reference sources that reasonable persons use to determine the ordinary meaning of words, [courts] often rely on them for assistance in determining the plain meaning of undefined terms.” E.g., Freeman v. X-Ray Assocs., 3 A.3d 224, 227–28 (Del. 2010).

– 30 – The question this raises, then, is whether the use of “specifically

related” in Section 220(b)(2)c. was intended by the General Assembly to mark

a lowering of the threshold from our common law, which for more than three

decades has held that a stockholder seeking inspection must show that the

records sought are “essential and sufficient to the stockholder’s stated

purpose.” E.g., Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026,

1035 (Del. 1995).95 After all, one thing can “specifically relate” to another

thing without being both “essential and sufficient” to the other thing.96 At the

same time, I am aware of at least one case in which the court seems to have

treated “specifically related” and “necessary and essential” as co-extensive.

See Doerler v. Am. Cash Exch., Inc., 2013 WL 616232, at *1 (“This evidence

is sufficient for the Plaintiffs to receive books and records specifically related

to the credible allegations of self[-]dealing with the corporation.”), *6 (“[T]he

95 See also, e.g., KT4 P’rs., 203 A.3d at 751–52 (Del. 2019) (“[T]he court must give the petitioner everything that is ‘essential,’ but stop at what is ‘sufficient.’”) (citing Thomas & Betts); Sec. First Corp., 687 A.2d at 569 (“The plaintiff bears the burden of proving that each category of books and records is essential to the accomplishment of the stockholder’s articulated purpose for the inspection.”) (citing Thomas & Betts); Lebanon Cnty. Emps.’ Ret. Fund v. AmerisourceBergen Corp., 2020 WL 132752, at *24 (Del. Ch. Jan. 13, 2020) (quoting Thomas & Betts and Palantir). 96 Consider, for example, a stockholder’s request for five years of audited financials solely for the purpose of valuing their stock. All five years of audited financials would seem to be “specifically related” to the purpose of valuing the stock, but fewer than all five years of audited financials may be necessary—i.e., essential and sufficient— to perform the valuation.

– 31 – Plaintiffs are entitled to inspect any documents that are necessary and

essential to investigating the self[-]dealing transactions.”) (Del. Ch. Feb. 19,

2013) (emphasis added).

Ultimately, I think the better reading of the General Assembly’s

inclusion of “specifically related” is that it was not meant to signal a change

in our books-and-records law regarding a stockholder’s obligation to establish

that each category of the books and records requested is essential and

sufficient to the stockholder’s stated purpose.97 Applied here, I find that the

books and records identified in the Demand are specifically related to Moran’s

stated investigative and valuation purposes.

As noted above, Moran was Unation’s CEO.98 While serving as

Unation’s principal executive officer, Moran alleges Unation’s board chair

(Bartoletta) deliberately walled him off from internal decision-making

processes, refused to provide him with financial records or other documents

to review, and engaged in equity offerings at half the price Moran paid for his

shares without providing “objectively verifiable” evidence to justify their

value and support Unation’s representations marketing its shares.99

97 Thomas & Betts Corp., at 1035. 98 Compl. ¶ 9. 99 See generally Compl.

– 32 – Corporate officers owe fiduciary duties to the corporation they serve,

just as directors do. Metro Storage Int’l, LLC v. Harron, 275 A.3d 810, 842

(Del. Ch. 2022) (citing Gantler v. Stephens, 965 A.2d 695, 708–09 (Del.

2009)). “The directors of Delaware corporations have ‘the legal responsibility

to manage the business of a corporation for the benefit of its shareholders

owners.’” and our law likewise confers such obligation on a corporation’s

officers. N. Am. Catholic Educ. Programming Found., Inc. v. Gheewalla, 930

A.2d 92, 101 (Del. 2007) (quoting Malone v. Brincat, 722 A.2d 5, 9 (Del.

1998); see Harron, 275 A.3d at 842. For Unation’s Chairman to deny its CEO

even basic financial or other information about the company, impacting his

ability to discharge his fiduciary duties, is concerning.

The facts alleged describe conduct where Unation’s Chairman and

other company officials acted to preclude Moran from valuing his shares and

from doing what Delaware law requires of him as an officer. The books and

records sought by the Demand are specifically related to Moran’s valuation

and investigation purposes.

– 33 – 3. The Allegations of the Complaint are Sufficient to Demonstrate that Moran’s Purposes for Seeking Inspection are Proper

Having found that the well-pleaded allegations of the complaint

establish that Moran is stockholder,100 and that Moran has satisfied Section

220(b)’s form and manner requirements,101 I turn to the final thing a

stockholder must establish under Section 220(c) before the court may order

inspection: that the inspection is for a proper purpose. See 8 Del. C.

§ 220(c)(3). This element is redundant after the enactment of SB 21, because

the Section 220(b)(2)a. already imposes this requirement,102 and I have

already found that the well-pleaded allegations of the complaint establish that

the Demand states a proper purpose for inspection.

B. Determining the Appropriate Scope of Production

Having found that the allegations of the complaint are sufficient to

establish that meets the form and manner requirements of Section 220(c), I

turn now to the scope of production. Section 220(e) states that a stockholder

100 See Part III.A.1, supra. 101 See Part III.A.2, supra. 102 Compare 8 Del. C. § 220(b)(2) (“A stockholder may inspect and copy the corporation’s books and records only if . . . a. The stockholder’s demand is made in good faith and for a proper purpose.”), with 8 Del. C. § 220(c) (“Where the stockholder seeks to inspect the corporations’ books and records, other than its stock ledger or list of stockholders, such stockholder shall first establish that . . . (3) The inspection such stockholder seeks is for a proper purpose.”).

– 34 – is only entitled to “books and records” unless they satisfy the requirements of

subsections (f) or (g). Because the court is granting inspection rights to Moran

through a default judgment, the applicability of subsections (f) and (g) raise

issues here that may not be present when a Section 220 case is fully litigated.

There is also a risk of creating an adverse incentive for corporations not to

participate in these proceedings if I conclude that the court cannot provide

more relief than granting access to the statutorily defined books and records.

This risk, however, must be balanced by the General Assembly’s purpose in

amending Section 220.

First, I will determine which of the category of records in the Demand

are books and records under Section 220(a)(1), because there is no question

that Section 220 authorizes me to require Unation to allow Moran to inspect

statutorily defined books and records if the requirements of Section 220(c) are

met, as I have held. Then I discuss the applicability of Section 220(f) and (g)

to any categories of records not covered by Section 220(a)(1), and how to

interpret and apply the heightened pleading requirements of Section 220(f)

and Section 220(g) when a corporation has defaulted by failing to appear and

defend.

– 35 – 1. Moran is Entitled to Most of Unation’s Statutorily Defined “Books and Records” Identified in the Demand

One change made by SB 21 is to define a category of “books and

records” that largely consists of board-level materials:

a. The certificate of incorporation, including any agreement or other instrument incorporated by reference in the certificate of incorporation.

b. The current bylaws, including any agreement or other instrument incorporated by reference in the bylaws.

c. Minutes of all meetings of stockholders and the signed consents evidencing all action taken by stockholders without a meeting, in each case for the three years preceding the date on which the stockholder demanded to inspect the books and records.

d. All communications in writing or by electronic transmission to stockholders generally within the three years preceding the date on which the stockholder demanded to inspect the books and records.

e. Minutes of any meeting of the board of directors or any committee of the board of directors and records of any action of the board of directors or any such committee.

f. Materials provided to the board of directors or any committee of the board of directors in connection with actions taken by the board of directors or any such committee.

g. Annual financial statements of the corporation for the three years preceding the

– 36 – date on which the stockholder demanded to inspect the books and records.

h. Any agreement entered into under 8 Del. C. § 122(18), which authorizes agreements between the corporation and stockholders that grant those stockholders certain control rights.

i. Director and officer independence questionnaires.103

The Demand identifies twelve categories of records that Moran seeks

to inspect. Seven of them are books and records under Section 220(a)(1).

Unation must produce and make available the following categories of records

identified in the Demand:

• The past three years of Unation’s audited financials (Category 1).

• Unation’s Shareholder Agreement (Category 2).

• Unation’s bylaws (Category 3).

• Minutes of all meetings of Unation’s stockholders and any signed consents evidencing action taken by the stockholders without a meeting within the past three years (Category 9).

• All communications in writing or by electronic transmission from Unation to the stockholders generally within the past three years (Category 10).

103 8 Del. C. § 220(a)(1).

– 37 – • Minutes of any meeting of the board of directors or any committee of the board of directors and records of any action of the board of directors or any such committee (Category 11).

• Materials provided to the board of directors or any committee of the board of directors in connection with actions taken by the board of directors or any such committee (Category 12).104

Categories 11 and 12—minutes and other records of board and board

committee meetings, and materials provided at board or board committee

meetings in connection with action taken at board or board committee

meetings—are unbounded by time. Based on the well-pleaded allegations of

the complaint, which state that “[s]tarting in at least 2023,” Unation was

keeping Moran, its CEO, “in the dark with respect to details about [Unation’s]

strategic decisions, operations, [and] objective financial state,”105 I find that

Moran is entitled to minutes of any meeting of Unation’s board or any

committee of Unation’s board, records of any action of the board or board

committee, and materials provided to the board or any board committee in

connection with actions taken by the board or board committee for the three

years preceding the date of the Demand.

104 Compl., Ex. A; 8 Del C. § 220(a)(1). 105 Id. ¶ 11.

– 38 – The remaining categories of the Demand (Categories 4 through 8) seek

records that are not books and records under Section 220(a)(1),106 and

Category 1 seeks audited financials for more years than Section 220(a)(1)

provides. Section 220(e), as previously noted, authorizes the court to order

the production of corporate records outside of Section 220(a)(1)’s books and

records only if a stockholder satisfies subsection (f) or subsection (g). See 8

Del. C. § 220(e). So I now consider whether subsections (f) and (g) of Section

220 allow me to order Unation to allow Moran to inspect records in any of

these categories.

2. Moran is Entitled to Inspect Records that are the Functional Equivalent of Unation’s Books and Records Under Section 220(f)

Section 220(f), as noted earlier in this report, states that if a corporation

does not have four categories of books and records defined in Section

220(a)(1), the court may order the corporation to produce the “functional

equivalent” of the missing Section 220(a)(1) books and records.107 But the

scope of the inspection is limited “only to the extent necessary and essential

106 Category 4 of the Demand seeks “[a]ny other corporate governance documents.” Id. Ex. A at 5–6. In a letter submitted after oral argument at the court’s invitation, Moran clarified that Category 4 is intended as “a non-duplicative catch-all confined to the scope of Section 220(f).” Dkt. 24 at 1. 107 8 Del. C. § 220(f).

– 39 – to fulfill the stockholder’s proper purpose.”108 The four categories are

(1) minutes of stockholder, board, or board committee meetings; (2) written

consents evidencing stockholder action without a meeting; (3) annual

financial statements; and, for corporations with a class of stock listed on a

national securities exchange, (4) director independence questionnaires.109

Section 220(f) affects the Demand here in two ways.

First, Category 4 of the Demand, as clarified and limited by Moran after

oral argument,110 seeks production of the functional equivalents of records

identified in Section 220(a)(1)c., e., or g., “including any document that

(1) reflects deliberations, decisions, or actions of [Unation’s] Board of

Directors or any Board committee; (2) reflects deliberations, decisions, or

actions of [Unation’s] stockholders; or (3) pertains to or affects the valuation

of [Unation].”111 Section 220(f) uses a conditional framework—if the records

identified in Section 220(a)(1)c., e., or g. exist, I cannot order the production

of their functional equivalents under Section 220(f). Unation’s choice to

default—rather than participate—in this action impedes this determination. I

am left to assess if I can order the production of those functional equivalents

108 Id. 109 Id. 110 Dkt. 24. 111 Id.

– 40 – in a factual vacuum because it cannot be known if Unation has the records

identified in Section 220(a)(1)c., e., or g.

Second, four categories of records identified in the Demand (Categories

5 through 8) are not books and records under Section 220(a)(1): Unation’s

cap tables;112 complete tax returns;113 information used to support corporate

valuations over the past two years;114 and records supporting the valuation that

resulted in Unation’s “equity offering at an ‘aggressive discount’ of $3 per

share.”115 Under Section 220(e), the court cannot order Unation to permit

inspection of these materials unless either Section 220(f) or Section 220(g)

applies. Here, I address whether Section 220(f) might apply, leaving my

discussion of Section 220(g) for Part III.B.3 of this report.

a. Moran is Entitled to an Order Authorizing Inspection of the Functional Equivalent Documents Sought by Category 4 of the Demand

Section 220(e) forbids the court from ordering “[a] corporation to

produce any records . . . other than the books and records set forth in

paragraph (a)(1)[,]” “[e]xcept as otherwise expressly provided in subsection

112 Compl. Ex. A at 6 (Category 5). 113 Id. (Category 6). 114 Id. (Category 7). 115 Id. (Category 8).

– 41 – (f) or subsection (g).” 8 Del. C. § 220(e). As a result, I cannot simply order

production of the requested “functional equivalent” Category 4 records

without first finding that doing so is “necessary and essential” to Moran’s

proper purposes under Section 220(f). But Unation’s default complicates

things. Unation has denied Moran an opportunity to establish through

discovery and trial that he is entitled to the functional equivalent documents

contemplated by Category 4 because he cannot show Unation does not have

the corresponding Section 220(a)(1) books and records.

One of the seemingly apparent purposes for SB 21’s amendments to

Section 220 is to discourage what some commentators have referred to as the

“trench warfare” where corporations “take overly aggressive positions with

no plausible basis in law” in response to legitimate stockholder inspection

requests under Section 220.116 The idea is to encourage corporations, in

response to demands that meet Section 220(b)’s form and manner

requirements, to produce—without the need for litigation—the core corporate

records now defined in Section 220(a)(1).117 If the stockholder and the

corporation cannot agree on the production of additional corporate records,

116 See Lawrence A. Hamermesh, et al., Optimizing the World’s Leading Corporate Law: A Twenty-Year Retrospective and Look Ahead, 77 BUS. L. 321, 372 (Spring 2022). 117 Id. at 376–78.

– 42 – then subsections (f) and (g) of Section 220 provide potential avenues through

which the court—through litigation—can determine if the stockholder has

satisfied the evidentiary burdens needed to obtain those additional records.

What this process does not contemplate—and what it should not

encourage—is gamesmanship by a corporation where, rather than retain

counsel and defend a Section 220 action on the merits, the corporation simply

defaults. Construing a corporation’s default to mean that the court is only able

to order the production of Section 220(a)(1)’s core board materials and

nothing further because no trial has occurred would create undesirable

incentives and could encourage corporations to continue the very sort of

“trench warfare” SB 21 was intended to discourage.

The solution presents itself when the public policy considerations for

granting default judgments are considered. Default judgments are a protective

device, designed to shield a diligent party from “interminable delay and

continued uncertainty as to [their] rights.” H.F. Livermore Corp. v.

Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970). It

also serves as a deterrent to parties who choose to delay or even boycott

proceedings as a litigation strategy. Id. at 691. In the Section 220 context,

as the Supreme Court has explained, this court is “highly dependent on the

respondent’s good faith participation in the process, because the respondent

– 43 – is likely to be the only participant in the settle-order process with knowledge

of which corporate records are relevant to the petitioner’s proper purpose as

determined by the court.” KT4 P’rs, 203 A.3d at 757 . More generally, as

this court has noted, “for the litigation system to function, parties must follow

the rules.” In re Exam Works Gp., Inc. S’holder Appraisal Litig., 2018 WL

1008439, at *9 (Del. Ch. Feb. 21, 2018) (addressing discovery abuses).

The solution is to give effect to the default, “deem admitted all the well-

pleaded facts in the complaint,”118 and then determine if the well-pleaded facts

in that complaint—and the reasonable inferences and conclusions to be drawn

from them—establish there is reason to believe that the corporation does not

have the books identified in Section 220(a)(1)c., e., or g., and that inspection

of their functional equivalents is therefore necessary and essential to the

stockholder’s proper purpose. If so, then the stockholder is entitled to an order

directing the corporation to produce the functionally equivalent records.

Doing that here, I conclude that the well-pleaded facts in the complaint,

and logical inferences taken from those well-pleaded facts, show that there is

reason to believe that Unation does not have the books and records identified

in Section 220(a)(1)c., e., or g., and that production of their functional

118 Hauspie, 945 A.2d at 586.

– 44 – equivalents is, therefore, necessary and essential to fulfill the stated purposes

for the Demand—valuing Moran’s shares and investigating potential waste

and mismanagement. The complaint adequately pleads that Moran, while

serving as Unation’s Chief Executive Officer, was routinely denied access to

minutes, board materials, audited financials, and the other core board

materials contemplated Section 220(a)(1). It is, I think, a fair inference that

when a company denies its CEO these materials it is because some or all of

those materials do not exist.119 I will therefore enter an order directing

Unation to produce the items sought by Category 4, as amended.120

119 It is conceivable, of course, that Unation might possess core board materials like meeting minutes, executed stockholder consents, and audited financials, and is simply refusing to produce them out of spite, for perceived tactical advantage, or for any of a multitude of other reasons. But that is not the most logical inference. In any event, if these core board materials exist, the time for Unation to disclose their existence—and argue production of their functional equivalents is neither necessary nor essential—was when Moran (as CEO) first asked for them, when Moran submitted his Demand, when Moran filed his complaint, or when defending this action on its merits. Unation had four earlier opportunities to avoid the result it now brings on itself by defaulting. 120 As for the meaning of “functional equivalents,” I address that in the next section of this Report.

– 45 – b. The Records Identified in Categories 5–8 of the Demand Are Functional Equivalents of Annual Financial Statements, but not Meeting Minutes, Stockholder Consents, or Records of Board or Board Committee Action

I turn now to considering if the Unation records identified in Categories

5 through 8 of the Demand—Unation’s cap tables; complete tax returns;

information used to support corporate valuations over the past two years; and

records supporting the valuation that resulted in Unation’s “equity offering at

an ‘aggressive discount’ of $3 per share”—are the functional equivalents of

meeting minutes, stockholder consents, records of board or board committee

action, or annual financial statements. The term “functional equivalent”—

like so many other new terms introduced by SB 21—was left undefined by

the General Assembly. So, I must first define “functional equivalent” for

purposes of Section 220(f).

Black’s Law Dictionary ascribes several possible meanings for the

word “functional,” the two most salient of which are “[o]f, relating to, or

involving the way in which something works or operates” and “[s]erving, or

designed to serve, some particular purpose.” Functional, BLACK’S LAW

DICTIONARY (12th ed. 2024).121 In turn, it defines “equivalent” as either

121 See also Functional, CAMBRIDGE DICTIONARY ONLINE, https://dictionary.camb ridge.org/us/dictionary/english/functional (“relating to the way in which something works or operates”) (last visited Dec. 22, 2025).

– 46 – “[e]qual in value, force, amount, effect, or significance” or “[c]orresponding

in effect or function; nearly equal; virtually identical.” Equivalent, BLACK’S

LAW DICTIONARY (12th ed. 2024).122 Taken together, the words suggest

something that serves the same or similar purpose or is intended to achieve

the same or similar result as something else.

This results-oriented definition for “functional equivalent” is consistent

with the term’s use in our law. For example, in Tolson v. State, our Supreme

Court used the term to explain that an “interrogation” to which Miranda

warnings apply “need not amount to actual questioning, but may be the

functional equivalent of questioning.” 900 A.2d 639, 643 (Del. 2006). It

explained that “functional equivalent” in this context means “any words or

actions on the part of the police (other than those normally attendant to arrest

and custody) that the police should know are reasonably likely to elicit an

incriminating response from the suspect”—a nearly identical test for

determining if an interaction with the police is an interrogation. Id. at 644.123

122 The definition of “equivalent” has not changed much over the years. See Equivalent, BLACK’S LAW DICTIONARY (6th ed. 1990) (defining the word as “[e]qual in value, force, measure, volume, power, and effect or having equal or corresponding import, meaning or significance; alike, identical.”). 123 The language is taken from the United States Supreme Court’s opinion in Rhode Island v. Innis, 446 U.S. 291, 302 (1980). See Tolson, 900 A.2d at 644 n.12 (citing Upshur v. State, 2004 WL 542164, at *1 n.5 (Del. Mar. 15, 2004) (quoting Rhode Island)).

– 47 – This court has also used the term in cases to denote that two items are

interchangeable in effect. See, e.g., In re Sears Hometown and Outlet Stores,

Inc., 309 A.3d 474, 523 (Del. Ch. 2024). And the court used the term

interchangeably with “functional alternative” to describe transactions that,

while done through different methods, led to the same result. See TW Servs.,

Inc. v. SWT Acquis. Corp., 1989 WL 20290, at *8–10 (Del. Ch. Mar. 2,

1989).124

The term also finds use in patent law, in the so-called “doctrine of

equivalents” used to evaluate some claims for patent infringement. Lawrence

M. Sung, Pat. L. Handbook § 3.13 (2025). A party can successfully invoke

the doctrine of equivalents if the challenged device “performs substantially

the same function in substantially the same way to obtain the same result.” Id.

(citing Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608

(1950)).

124 There are many other decisions from Delaware courts in which the term “functional equivalent” appears. The court has not attempted a complete survey, but a sampling confirms this general results-oriented approach. See, e.g., Gibson v. State, 1993 WL 169133, at *2 (Del. May 12, 1993) (explaining how a variety of ordinary objects have been held to be the “functional equivalent” of a bludgeon “when used as such”); In re P3 Health Grp. Hldgs., LLC, 2022 WL 16548567, at *27 (Del. Ch. Oct. 31, 2022) (describing a de-SPAC merger as the functional equivalent of a traditional initial public offering because, like an IPO, it “is a way for an operating business to accomplish the twin goals of raising capital and accessing the public markets”).

– 48 – With this guidance in mind, I construe the term “functional equivalent”

in Section 220(f) to mean that a document is the functional equivalent of

meeting minutes, stockholder consents, records of board of board committee

action, or annual financial statements if that document (1) contains or

conveys, alone or combined with other documents, substantially the same

information as meeting minutes, stockholder consents, records of board of

board committee action, or annual financial statements and (2) would enable

a reasonable individual reviewing that document to learn substantially the

same things, come to substantially the same conclusions, or draw substantially

the same inferences as that individual would have been able to do with the

actual meeting minutes, stockholder consents, records of board or board

committee action, or annual financial statements.

Using this definition, I do not believe that the items in Categories 5

through 8 of the Demand—Unation’s cap tables; complete tax returns;

information used to support corporate valuations over the past two years; and

records supporting the valuation that resulted in Unation’s “equity offering at

an ‘aggressive discount’ of $3 per share”—are the functional equivalent of

meetings minutes, stockholder consents, or records of board or board

committee action. Such records would not ordinarily contain or convey, alone

or combined with other documents, substantially the same information as

– 49 – meeting minutes, stockholder consents, or records of board of board

committee action and would not enable an individual to learn substantially the

same things, come to substantially the same conclusions, or draw substantially

the same inferences as the individual could do with the actual meeting

minutes, stockholder consents, or records of board of board committee action.

What remains, then, is to determine if any of the items in Categories 5

through 8 are the functional equivalent of Unation’s annual financial

statements. I conclude, when read together, that they are.

i. Information Commonly Contained in Financial Statements and Their Uses

The term “financial statements” is commonly understood to encompass

four specific documents: the balance sheet, the income statement,125 the cash

flow statement, and the statement of owners’ equity.126

The Balance Sheet. A balance sheet lists “the assets, liabilities and

owners’ equity (the investment of the [stockholders]) of a business as of a

particular point in time.”127 The balance sheet typically includes two kinds of

125 Also referred to as a profit and loss statement. Income Statement, BLACK’S LAW DICTIONARY (12th ed. 2024). 126 See Charles H. Meyer, Accounting and Finance for Lawyers 1–16 (2d ed. 2002); Megan Drew, Financial Statements: List of Types and How to Read Them, INVESTOPEDIA (Jun. 15, 2025), https://www.investopedia.com/terms/f/financial- statements.asp; Financial Statement, BLACK’S LAW DICTIONARY (12th ed. 2024). 127 Meyer, supra n.126, at 1–2.

– 50 – assets. The first type represents tangible or intangible property interests, or a

legal right of the company, which commonly includes the company’s cash and

cash equivalents, receivables, inventories, real and personal property, and

intellectual property.128 The second are deferred expenses/costs which are

“cost[s] incurred by a business where the business expects to benefit from that

cost over a period of time[,]” such as prepaid expenses (e.g., rent and

utilities).129

Liabilities represent “the obligations of a [corporation] to persons other

than” its stockholders.130 In other words “any money that a company owes to

outside parties.”131 Common liabilities include bills, loan payments, interest

on bonds issued to creditors, rent, and salaries.132 Similarly to assets, liabilities

may also represent obligations that will come do in the future, or prepaid

revenues collected before the company renders a service or delivers a good.133

128 Id. at 2. See also Jason Fernando, Balance Sheet: Explanation, Components, and Examples, INVESTOPEDIA (Oct. 17, 2025), https://www.investopedia.com/terms/b/ balancesheet.asp. 129 Meyer, supra n.126, at 2–3; Fernando, supra n.128. 130 Meyer, supra n.126, at 3. 131 Fernando, supra n.128. 132 Meyer, supra n.126, at 3; Fernando, supra n.128. 133 Meyer, supra n.126, at 4. A balance sheet might also list “contingent liabilities” which are future obligations that may not ever need to be paid. Id.

– 51 – Lastly, Owners’ Equity is money that is attributable to the contributions

of stockholders combined with the accumulated income of the business that

has not been distributed to the stockholders.134

For corporations, the accounts in owners’ equity typically include capital stock, representing the par or stated value of stock that has been issued, additional paid-in capital [“APIC”], representing the amount paid for stock in excess of its par or stated value, and retained earnings, representing the cumulative or running balance of the net income of the [corporation] less any distribution of dividends to the [stockholders].135

The balance sheet is often used to determine a corporation’s financial

health at a specific point in time.136 It lists all the corporation’s debt and can

be used to determine the liquidity of its assets and its solvency.137 Some

important financial ratios are calculated from items on the balance sheet.138

Valuation experts commonly refer to the balance sheet to determine the

current value of assets, the mix of debt and equity ed by the corporation, and

the current value of each.139

134 Id. at 4–5. 135 Id. at 5. 136 Fernando, supra n.128. 137 Id. 138 Id. 139 See Aswath Damodoran, Investment Valuation 30, 36 (3d ed. 2012); Meyer, supra n.126, at 6.

– 52 – The Income Statement. An income statement lists a corporation’s

revenues, costs, expenses, profits/gains, and losses for a specified period.140

An income statement differs from a balance sheet in that it shows changes in

accounts over time, whereas the balance sheet shows what a corporation owns

and owes at the time it is prepared.141 The income statement commonly shows

earnings per share calculations as well.142 Investors and analysts often rely

on income statements to assess the profitability of a corporation its return on

equity.143

The Cash Flow Statement. A cash flow statement provides

information about changes in a corporation’s cash balance for a period

covered by the income statement.144 The cash flow statement is meant inform

a reader about “the sources from which cash is derived and how cash is

used.”145 A cash flow statement is usually divided into three sections. The

first shows cash flow from operating activities. Operating activities normally

140 Meyer, supra n.126, at 7; Jason Fernando, Profit and Loss Statement: Meaning, Importance, Types, and Examples, Investopedia (June 6, 2025), https:// www.investopedia.com/terms/p/plstatement.asp. 141 Fernando, supra n.140. 142 Meyer, supra n.126, at 10; Damodoran, supra n.139, at 44–45. 143 See Damodoran, supra n.139, at 42–43; Fernando, supra n.140. 144 Meyer, supra n.126, at 11. 145 Id.

– 53 – include the corporation’s revenue generating activities, such as making sales,

and the amounts paid out for usual expenses, such as payroll.146

The second shows cash flow from investment activities. This includes

cash received from buying and selling stocks and bonds, making and receiving

loans, and buying and selling operating assets, like buildings, equipment, or

patents and intellectual property.147

The final section shows cash flows from financing. This section

provides an overview of the cash used in business financing and measures the

cash flow between a corporation and its stockholders and creditors.148 This

section normally lists how much the amounts paid to stockholders as

dividends and the amounts received through the issuance of bonds.149

Importantly, cash is not equivalent to income.150 The cash flow

statement usually begins with the net income value in the income statement

and adjusts the value to reflect expenses and income that a corporation

received in cash. The income statement typically calculates net income from

146 Id. See also Fernando, supra n.140. 147 Meyer, supra n.126, at 13; Fernando, supra n.140. 148 Id. 149 Id. 150 Meyer, supra n.126, at 11.

– 54 – accounts receivable that have not yet been paid to the business in cash.151 So,

for example, a company that makes many sales on credit but has not yet been

paid for the sold inventory will have a lower revenue on its cash flow

statement than on its income statement.

Cash flow statements can shed light on many of a corporation’s

activities. A corporation with a significant increase in investment

expenditures can signal growth and investment in the future, while growth in

investment revenue, like a sell off of critical equipment, could indicate

slowing sales.152 A negative cash flow from financing can indicate how much

money the corporation pays in dividends or stock buybacks, which could

indicate financial health and optimism about future performance.153

Statement of Owners’ Equity. The statement of owners’ equity

summarizes the changes in stockholders’ equity accounts for the period

covered by the income statement.154 The equity accounts shown are the

151 See Meyer, supra n.126, at 11; Fernando, supra n.140. 152 Fernando, supra n.140. 153 Id. 154 Meyer, supra n.126, at 10–11; Jeffrey J. Haas, Corporate Finance in a Nutshell 43 (2004).

– 55 – capital stock paid at par value (“Capital Stock”) account, APIC account, and

the retained earnings account.155

The Capital Stock and APIC account will categorize stock in three

ways. The first is authorized stock, which is the number of shares a

corporation is authorized to issue in its certificate of incorporation or

charter.156 The second is authorized and issued stock, which list shares that a

corporation has distributed. The third is authorized, issued, and outstanding

stock. The third category is used when a corporation buys back stock it issued

to stockholders, known as “treasury stock,” but there are still shares in the

hands of stockholders.157 The shares currently held by stockholders are

referred to as the outstanding stock.158 The retained earnings account reflects

a corporation’s earned capital as listed on the balance sheet.

Valuation experts use the statement of owners’ equity to measure a

corporation’s performance and profitability by demonstrating why a

corporation’s net assets changed year-over-year.159 Under GAAP, the method

155 Haas, supra n.154, at 43. 156 Id. at 44. 157 Id. at 44; Alicia Tuovila, Treasury Stock (Treasury Shares): Definition, Use on Balance Sheets, and Example, INVESTOPEDIA (June 2, 2024), https://www.investo pedia.com/terms/t/treasurystock.asp. 158 Haas, supra n.154, at 43. 159 Id. at 42.

– 56 – used to calculate the values on the statement of owners’ equity reduce the

volatility reflected in the income statement.160

ii. The Information in Capitalization Tables and its Uses

A capitalization (“cap”) table is a detailed breakdown of a corporation’s

ownership structure that outlines who holds equity and in what proportion.161

Cap tables often include all of a corporation’s capital, including common

stock, preferred stock, options and warrants, restricted stock, and convertible

instruments attributable to each stockholder.162 Analysts often use

information in a cap table to calculate the present value of stock based on the

potential change in its value from options and warrants, restricted stock, and

convertible notes.163

iii. The Information Contained in Tax Returns and its Uses

Tax returns also contain relevant financial information. Domestic

corporations are required to complete IRS Form 1120 with certain attached

160 See id. at 45. 161 Julie Young, Capitalization (Cap) Table: What it Is and How to Create and Maintain One, INVESTOPEDIA (July 2, 2025), https://www.investopedia.com/terms/ c/capitalization-table.asp. 162 See id.; What is a Cap Table?, CARTA (Nov. 6, 2025), https://carta.com/learn/ startups/equity-management/cap-table/. 163 Damodoran, supra n.139, at 442–46.

– 57 – supplements.164 Form 1120 requires a filing corporation to include, among

other things, its total income for the year, its expenses on certain categories,

the method of accounting it uses to calculate its income, and its balance sheets

dated at the beginning and end of the tax year.165 A corporate tax return may

also include several supplements that list its ownership in foreign entities,166

capital gains and losses from the corporations investments,167 and information

about equity holders who possess significant stock holdings.168

Tax returns are useful because they can reflect many important changes

in a company. For example, corporations can deduct the difference between

market price and the exercise price of warrants and stock options when they

are exercised.169 Important valuation metrics, such as free cash flows, are

calculated using the information in tax statements.170

164 See generally IRS, 2024 Instructions for Form 1120 (2024), https://www.irs.gov/pub/irs-pdf/i1120.pdf. 165 IRS, Form 1120 (2024), https://www.irs.gov/pub/irs-pdf/f1120.pdf. 166 See IRS, Schedule N (Form 1120) (2024), https://www.irs.gov/pub/irs-pdf/f112 0sn.pdf. 167 See IRS, Schedule D (Form 1120) (2024), https://www.irs.gov/pub/irs-pdf/f112 0sd.pdf. 168 See IRS, Schedule G (Form 1120) (2024), https://www.irs.gov/pub/irs-pdf/f112 0sg.pdf. 169 Damodoran, supra n.139, at 446. 170 See generally Robert W. Holthausen & Mark E. Zmijewski, Corporate Valuation Theory, Evidence & Practice 115–133 (2d ed. 2019) (discussing the importance of

– 58 – iii. Information Used to Support Corporate Valuations

Unation records used to support valuations of Unation—over the past

two years (Category 7) and for the equity offering at $3 per share (Category

8)—are the functional equivalent of annual financial statements. Financial

statements themselves are, after all, a key component of any corporate

valuation (if the documents exist).171 So if a company has not prepared annual

financial statements but somehow still purported to value itself, it is

reasonable to infer that the company records used to support that valuation

would contain or convey, alone or combined with other documents,

substantially the same information as annual financial statements and would

enable an individual to learn substantially the same things, come to

substantially the same conclusions, or draw substantially the same inferences

as the individual could do with the actual annual financial statements.

analyzing the impact of taxes on free cash flows); Damodoran, supra n.139, at 252– 58, 847–48 (discussing the effect of tax rates on valuation). 171 See, e.g., Rivest v. Hauppauge Digit. Inc., 2022 WL 3973101, at *20 (Del. Ch. Sep. 1, 2022) (collecting cases) (Where “a stockholder that wishes to value her shares usually seeks different types of documents[,] ‘[t]he invariable starting point is financial statements[.]’”); Shannon Pratt, Valuing a Business 67–71, 72–75 (6th ed. 2022) (discussing guidelines for collecting and using financial statements to value a business); Bizzari v. Suburban Waste Servs., 2016 WL 4540292, at *7–8 (Del. Ch. Aug. 30, 2016); Jefferson v. Dominion Hldgs., Inc., 2014 WL 4782961, at *1 (Del. Ch. Sep. 14, 2014).

– 59 – I am satisfied, absent any opportunity to more narrowly define the

scope of production due to Unation’s default, that the combination of

Unation’s cap table, tax returns, and records used to generate corporate

valuations are reasonably likely to contain or convey, as a group, substantially

the same information as annual financial statements and would enable an

individual to learn substantially the same things, come to substantially the

same conclusions, or draw substantially the same inferences as the individual

could do with the actual annual financial statements. Moran is therefore

entitled to an order allowing him to inspect these records.

3. Moran is Entitled to Inspect the Records Requested in Categories 5–8 of the Demand and a Fourth Year of Audited Financials Under Section 220(g)

Having found that the records identified in Categories 5 through 8 of

the Demand are not the functional equivalent of meeting minutes, stockholder

consents, records of board or board committee action, or audited financial

statements, and thus not some I can order inspection of under Section 220(f),

I now consider whether Moran is entitled to inspect those records under

Section 220(g). I must also determine if Moran is entitled to the fourth year

of audited financials sought in Category 1 of the Demand, because Section

– 60 – 220(a)(1) limits audited financials to the three years preceding the date of a

demand.172

Section 220(g) is, as one author has described it, a “safety valve”

provision to permit a stockholder to inspect records not listed in

subsection (a)(1).173 The court may order inspection of “other specific

records” under Section 220(g) if the following three things are true:

(1) Such stockholder has met the requirements of subsection (b) of this section;

(2) Such stockholder has made a showing of a compelling need for an inspection of such records to further the stockholder’s proper purpose; and

(3) Such stockholder has demonstrated by clear and convincing evidence that such specific records are necessary and essential to further such purpose.

8 Del. C. § 220(g). This short stretch of language introduces four more terms

that Section 220 does not define: “compelling need”; “clear and convincing

evidence”; “specific records”; and “necessary and essential.” Each will be

172 I did not consider whether I could order inspection of a fourth year of audited financial statements using Section 220(f)’s “functional equivalent” analysis because it seems self-evident that audited financial statements for one year cannot be the functional equivalent of audited financial statements for three other years. 173 Daniel Meyer, Blunting the “Tools at Hand”: Recent Developments in Delaware Books-and-Records Demand Law, 33 U. MIAMI L. REV. 387, 400 (2025).

– 61 – addressed below as I address whether Moran is entitled to any records through

Section 220(g).

a. Moran Has Met the Requirements of Section 220(b)

In Part III.A.2 of this Report, I held that the Moran had complied with

Section 220(b), so I need not address this element further.

b. Moran Has Shown a Compelling Need for Inspection of the Documents in Categories 5–8 of the Demand and a Fourth Year of Audited Financials

Turning to the second element, I must determine the meaning of

“compelling need” in Section 220(g)(2). I do so by borrowing from our

State’s case law on the discovery of opinion work product. In Tackett v. State

Farm Fire & Cas. Ins., the Supreme Court held that a party seeking discovery

of opinion work product—work product disclosing the mental impressions or

advice of counsel—must show that the information is “directed to the pivotal

issue in the current litigation and the need for the material must be

compelling.” 653 A.2d 254, 262 (Del. 1995). It described this as something

greater than the standard for obtaining discovery of non-opinion work product

in Rule 26(b)(3), which requires a litigant to show “a substantial need” for the

information and “an inability to obtain the substantial equivalent elsewhere”

by other means. Id. In support of this finding, the Tackett court quoted

– 62 – language from the United States Supreme Court that “we think a far stronger

showing of necessity and unavailability by other means . . . would be

necessary to compel disclosure” of opinion work product. Id. (quoting

Upjohn Co. v. United States, 449 U.S. 383, 401–02 (1981)).

I believe that the Delaware Supreme Court’s articulation of

“compelling need” in Tackett provides an appropriate framework here. When

a stockholder seeks to inspect corporate records under Section 220(g)(2), the

stockholder must establish that the records sought are pivotal to the

stockholder’s stated purpose and that the stockholder would not be able to

obtain the information therein from Section 220(a)(1) books and records (or

another source).174

Applying that standard here, in the context of Unation’s default, I find

that the well-pleaded facts of the complaint demonstrate a compelling need

174 I am unconvinced the “compelling need” requirement in Section 220(g)(2) adds anything to a stockholder’s burden that is not already imposed through Section 220(g)(3)’s separate requirement that a stockholder demonstrate by “clear and convincing evidence” that the specific records are “necessary and essential” to the stockholder’s purpose. The Supreme Court has defined a “necessary and essential” document as one that “addresses the crux of the shareholder’s purpose” and “is unavailable from another source.” Espinoza v. Hewlett-Packard Co., 32 A.3d 365, 371–72 (Del. 2011). And “crux” and “pivotal” are synonyms. See, e.g., Crux, DICTIONARY.COM, https://www.dictionary.com/browse/crux (defining “crux” as “a vital, basic, decisive, or pivotal point”) (last visited Dec. 22, 2025). If the purpose is proper, the documents sought are necessary and essential to that purpose, and a stockholder shows that connection by clear and convincing evidence, I fail to see how a stockholder has not also established a compelling need for the records.

– 63 – for Moran to inspect the documents in Categories 5 through 8 of the Demand

and a fourth year of audited financials. As counsel aptly noted during

argument, Unation’s failure to appear has left Moran operating in a vacuum.175

Unation has intentionally left Moran—both as CEO and stockholder—in the

dark as to wide swaths of Unation’s operations. And repeating a point I made

in the “functional equivalents” portion of this Report (Part III.B.2), this

decision to default must have consequences. By defaulting, Unation has

denied Moran the opportunity this action was supposed to present him: to

find out through discovery and trial if Unation even has the records he seeks

and, if it does, meet his evidentiary burdens to obtain them. I am satisfied

these facts establish a compelling need under Section 220(g)(2) for Moran to

inspect the documents sought in Categories 5 through 8 of the Demand and a

fourth year of audited financials (if audited financials exist).

c. The Well-Pleaded Facts in the Complaint Provide Clear and Convincing Evidence That the Records in Categories 5–8 of the Demand and a Fourth Year of Audited Financials are Necessary and Essential to Moran’s Purposes

Turning now to the third element, I must determine the meaning of three

terms in Section 220(g)(3): “clear and convincing evidence”; “specific

175 Dkt. 26 at 44.

– 64 – records”; and “necessary and essential.” The first and third terms have well-

understood meanings, but the second term does not.

i. Clear and Convincing Evidence

Evidence is clear and convincing if it “produces an abiding conviction

that the truth of the contention is highly probable.” Hudak v. Procek, 806

A.2d 140, 147 (Del. 2002). “To establish proof by clear and convincing

evidence means to prove something that is highly probable, reasonably

certain, and free from serious doubt.” Id. at 147 (citation omitted). “The clear

and convincing evidence standard does not, however, require that the

evidence negate all reasonable doubt or that the evidence must be

uncontroverted.” 29 AM. JUR. 2D Evidence § 170.

ii. Specific Records

The adjective “specific” does not have a fixed, single meaning.

“Specific” can be understood as requiring an exacting, “n-of-1” level of

precision,176 as a synonym for “unique.”177 Understood this way, the term

176 Specific, MERRIAM-WEBSTER DICTIONARY, https://www.merriam-webster.com/ dictionary/specific (last visited Dec. 22, 2025) (“restricted to a particular individual, situation, relation, or effect”); see also Specific, BLACK’S LAW DICTIONARY (6th ed. 1990) (“Precisely formulated or restricted; definite; explicit; of an exact or particular nature.”); Specific, BLACK’S LAW DICTIONARY (12th ed. 2024) (“Of or relating to or designating a particular or defined thing; explicit.”). 177 Specific, MERRIAM-WEBSTER THESAURUS, https://www.merriam-webster.com/ thesaurus/specific (last visited Dec. 22, 2025).

– 65 – “specific records” would require a stockholder to establish and articulate to

the court precise and extremely detailed information about what corporate

records exist and can be ordered produced by the court if the high threshold

of “clear and convincing evidence” is met. So, for example, the court would

be limited to ordering production of a memorandum only if it could be

identified by unique criteria, such as author, recipients, date, and subject line.

This exacting meaning of “specific records” would dramatically

transform the litigation of Section 220 cases in our court.178 If “specific

records” means identifying unique, individual documents, stockholders will

need to conduct extensive and intrusive discovery into the existence and

location of a corporation’s documents that are the subject of their inspection

demand in order to make their showing to the court that (on a clear and

convincing evidence standard) that those unique documents are necessary and

essential to their proper purposes. The court has noted before that some

discovery about what types of books and records exist and who has them is

helpful in ruling on Section 220 demands,179 but an exacting interpretation of

178 See, e.g., KT4 P’rs., 203 A.3d at 754–55 (“Books and records actions are not supposed to be sprawling, oxymoronic lawsuits with extensive discovery. Rather, as the statutory text of § 220 itself reflects, the Court of Chancery is entitled to ‘summarily order’ an inspection.”). 179 See AmerisourceBergen, 2020 WL 132752, at *26 (“It is often helpful when ruling on a Section 220 demand to have information about what types of books and

– 66 – “specific records” would explode this in a way that is inconsistent with the

goals of reducing burdens on corporations in Section 220 cases and resolving

these summary proceedings in the 60–90 days the court contemplates.180

But such exacting precision for “specific” is not the only way to

interpret the word. “Specific” can also mean “so clearly expressed as to leave

no doubt about the meaning.”181 In that sense, “specific” has a meaning

similar to the noun form of “particular” (“particularity”), which in our law

does not always require a uniform, inflexible, and exacting level of

records exist and who has them. The limitations on the scope of discovery in a Section 220 action exist to ensure that the parties do not expand a books-and-records action into a plenary proceeding, with the plaintiffs seeking discovery into the merits of future claims and the defendants seeking discovery into future defenses. But the parties can obtain discovery into the limited issues raised by the Section 220 proceeding . . . . The resulting record can assist the parties in resolving their dispute, and it later assists the court in crafting a tailored order.”); see also Pettry v. Gilead Sciences, Inc., C.A. No. 2020-0132-KSJM, Dkt. 70 at 57–58 (Del. Ch. May 8, 2020) (TRANSCRIPT) (“[I]t’s a waste of both litigant and judicial resources to examine the question of scope of production in the abstract without the knowledge of what documents actually exist . . . . [I]nformation concerning the existence and whereabouts of documents sought in a 220 demand is certainly relevant and, again, also helpful.”). 180 See Hamermesh, et al., supra n.116, at 377 (arguing that Section 220 amendments need to find a balance that would “more efficiently enable the Delaware courts to satisfy legitimate plaintiffs’ needs without subjecting companies to undue expense and overreach”). 181 See Specific, MERRIAM-WEBSTER DICTIONARY, https://www.merriam- webster.com/dictionary/specific (last visited Dec. 15, 2025).

– 67 – precision.182 I use the term “precision” here deliberately, as the term “specific

records” can, I believe, be interpreted as intending to reinforce—not replace—

the level of specificity our Section 220 common law already says is required

when this court orders production. In this scenario, “specific records” codifies

the prevailing requirement that the court’s order granting inspection be

“circumscribed with rifled precision,”183 so that the stockholder receives only

those records that are clearly and convincingly shown at trial to be necessary

182 See Part III.A.2.c. (construing “reasonable particularity”). “Specific” and “particular” are synonyms. See Specific, MERRIAM-WEBSTER THESAURUS, https://www.merriam-webster.com/thesaurus/specific (last visited Dec. 22, 2025). “Particularity” is also the operative standard (without “reasonable”) for allegations of fraud or mistake under Court of Chancery Rule 9(b), and for pleading demand futility under Court of Chancery Rule 23.1. As Vice Chancellor Slights thoughtfully explained in Elburn on Behalf of Invs. Bancorp, Inc. v. Albanese, discussing Rule 23.1, particularity requires “some degree of specificity,” but it does not require facts “sufficient to sustain a judicial finding.” 2020 WL 1929169, at *7 (Del. Ch. Apr. 21, 2020). “[C]ontext matters when assessing the adequacy of particularized pleading. No rational pleading standard can require a plaintiff to plead specific facts that he has no means to know.” Id. at *8. And even under Rule 9(b), an exacting level of precision is not always required. A plaintiff “must allege the circumstances of the fraud with detail sufficient to apprise the defendant of the basis for the claim” and “lack of specificity as to date, place, and time [is] not fatal, provided that the pleadings put defendants on sufficient notice of the actual misconduct with which they are charged.” LVI Gp. Invs., LLC v NCM Gp. Hldgs., LLC, 2017 WL 1174438, at *4 (Del. Ch. Mar. 29, 2017) (quoting Prairie Capital III, L.P. v. Double E Hldg. Corp., 132 A.3d 35, 49 (Del. Ch. 2015), and Yavar Rzayev, LLC v. Roffman, 2015 WL 5167930, at *4 (Del. Super. Aug. 31, 2015)). 183 Sec. First Corp., 687 A.2d at 570 (“A Section 220 proceeding should result in an order circumscribed with rifled precision.”).

– 68 – and essential to the stockholder’s proper purposes.184 Specificity, like rifled

precision, would thus require “a fact specific inquiry” which “can only be

determined in the context of a specific case” and require the court to “make a

qualitative analysis of the documents demanded.”185

I find that this latter meaning for “specific records” is the one that better

fits Section 220 as a summary proceeding and the spirit of SB 21’s

amendments to Section 220, so I adopt it here.

iii. Necessary and Essential

Our Section 220 case law teaches that documents are necessary and

essential “if they address the ‘crux of the shareholder’s purpose’ and if that

information is ‘unavailable from another source.’” Inter-Loc. Pension Fund

GCC/IBT v. Calgon Carbon Corp., 2019 WL 479082, at *16 (Del. Ch. Jan.

25, 2019) (quoting Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension

Tr. Fund IBEW, 95 A.3d 1264, 1271 (Del. 2014)). “‘The inspection should

184 See Emps.’ Ret. Sys. of Rhode Island v. Facebook, Inc., 2021 WL 529439, at *5 (Del. Ch. Feb. 10, 2021) (“[T]he court must tailor its order for inspection to cover only those books and records that are “essential and sufficient to the stockholder’s stated purpose.”) (quoting Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension Trust Fund IBEW, 95 A.3d 1264, 1278 (Del. 2014)); see also KT4 P’rs, 203 A.3d at 752 (Del. 2019) (“[T]he court must give the petitioner everything that is ‘essential,’ but stop at what is ‘sufficient.’”) (quoting Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 775 (Del. Ch. 2016)). 185 Wal-Mart Stores, Inc. v. Indiana Elec. Workers Pension Tr. Fund IBEW, 95 A.3d 1264, 1283 (Del. 2014).

– 69 – stop at the quantum of information . . . sufficient to accomplish the plaintiff’s

stated purpose.’” Inter-Local Pension Fund, 2019 WL 479082, at *16

(quoting Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 788 (Del. 2016),

abrogated on other grounds, 214 A.3d 933 (Del. 2019)). If the stockholder

already has sufficient information to fulfill their stated purpose, the inspection

can be denied for “seeking materials beyond what is ‘needed to perform the

task.’” Yahoo! Inc., 132 A.3d at 788 (quoting Carapico v. Phila. Stock Exch.,

Inc., 791 A.2d 787, 793 (Del. Ch. 2000)).186

Considering Section 220(g) under these circumstances, I find that the

facts alleged in Moran’s complaint—which are deemed admitted by Unation

on default—demonstrate by clear and convincing evidence that the records

sought by Categories 5 through 8 and a fourth year of audited financials are

necessary and essential to Moran’s investigative and valuation purposes. To

repeat what was noted earlier in this Report,187 Moran was Unation’s CEO but

Unation’s Chairman walled him off from internal decision-making processes,

186 For example, if a Section 220 action is brought to evaluate a possible derivative suit, the documents that are necessary and essential are “those that are required to prepare a well-pleaded complaint.” Kaufman v. CA, Inc., 905 A.2d 749, 753 (Del. Ch. 2006). 187 See supra Part I.C, Part III.A.2.d.

– 70 – refused to provide him with financial records or other documents to review,

and engaged in equity offerings at half the price Moran paid for his shares

without providing “objectively verifiable” evidence to justify their value and

support Unation’s representations marketing its shares.188 Conduct by

Unation’s Chairman and other company officials that prevented Moran from

doing what Delaware law requires of him as an officer.

This, combined with the fact that Moran has no knowledge of or ability

to find out what books and records Unation maintains, demonstrates a

compelling need for the inspection. Absent Unation producing these

documents, it appears there is no other way for Moran to obtain them. Further,

if Unation had participated, then it would have had an opportunity to refute

Moran’s allegations. Giving Moran the rights listed in Section 220(g), in my

view, creates the correct incentives for corporations to participate in Section

220 actions without subverting the General Assembly’s determination that

inspection of non-Section 220(a)(1) records requires stockholders to meet a

higher burden. Moran is entitled to inspect the records listed in demand

188 See generally Compl.

– 71 – Categories 5 through 8 and to receive a fourth year of audited financials (if

the audited financials exist).189

IV. CONCLUSION

Defendant Unation, Inc. was properly served with the complaint and

summons in this Section 220 action, had ample notice of this action and

plaintiff’s motion for default judgment, and not appeared and defended. I

therefore recommend that judgment by default be entered in favor of plaintiff

on the bases set forth in this report. This is a final report. Under Court of

Chancery Rule 144(d), any party taking exceptions must file a notice of

exceptions by January 2, 2026.

189 The requirements imposed by Section 220(g)(2) and (3) are ones that a stockholder will ordinarily be able to try to meet through discovery and trial. The demand itself does not need to establish the “compelling need” or identify the “clear and convincing evidence” establishing that records are necessary and essential. This is, I think, plain from the text of Section 220(g), which begins “[i]n any proceeding brought by a stockholder . . . .” 8 Del. C. § 220(g). The requirements for a demand are in Section 220(b), which are separately incorporated into Section 220(g) through paragraph (g)(1).

– 72 –