Delaware Supreme Court: Some News Reports Can Justify Corporate Records Demands
Delaware's high court ruled that, in exceptional cases, post-demand news reports can justify records suits.
Why it matters: Delaware’s Chancery Court decisions shape corporate law nationwide. This ruling clarifies that, under certain conditions, litigants may rely on news published after a formal demand as credible evidence, directly impacting strategies for fiduciary and governance litigation.
- On March 25, 2026, Delaware's Supreme Court issued a split ruling in Paramount Global v. State of Rhode Island Office of the General Treasurer.
- The court held that post-demand, confidentially sourced news articles may serve as a credible basis for a stockholder's records demand under 8 Del. C. §220 in exceptional circumstances.
- The decision affirmed a fact-specific approach to assessing reliability of media reports, rejecting a categorical exclusion or reliance solely on outlet reputation.
- The Employees' Retirement System of Rhode Island, holding Class B Paramount stock, suspected the controller steered a sale for personal benefit, prompting the records demand.
The Delaware Supreme Court's March 25, 2026 decision in Paramount Global v. State of Rhode Island Office of the General Treasurer sets new parameters on the use of news articles as evidence in corporate records inspection suits.
- At issue was whether a stockholder, after submitting a formal demand for records under 8 Del. C. §220, can use news reports published afterward to establish a credible basis to suspect corporate wrongdoing.
- The case arose when the Employees' Retirement System of Rhode Island, a nonvoting Class B shareholder in Paramount, sought inspection rights, alleging controller Shari Redstone steered a sale for her own benefit, possibly implicating loyalty and corporate-opportunity duties.
- The Court rejected Paramount’s push for a categorical exclusion of post-demand evidence. Instead, it ruled that “when a stockholder seeks relief under §220, it will be limited to evidence identified in the demand... But under exceptional circumstances, the Court of Chancery may, in the exercise of its sound discretion, consider post-demand evidence that is material... and not prejudicial.”
- The ruling clarifies that not all news articles will suffice; reliability is to be assessed on a fact-specific basis rather than defaulting to an outlet’s reputation, as highlighted in industry commentary.
This nuanced approach gives litigants in Delaware new tools for supporting inspection demands, while reminding courts to scrutinize the reliability of such post-demand media evidence closely.
By the numbers:
- March 25, 2026 — Date Delaware Supreme Court issued the decision
- 8 Del. C. §220 — Statute governing stockholder books-and-records inspection demands
- 1 — Number of plaintiff's nonvoting Class B stock holdings questioned in the case
Yes, but: The decision leaves open what precisely qualifies as 'exceptional circumstances' for admitting post-demand evidence, and offers no checklist for determining the reliability of news sources.