Leb. Cty. Employees' Ret. Fund v. Amerisourcebergen Corp.
Court of Chancery of Delaware
October 15, 2019, Submitted; January 13, 2020, Decided
C.A. No. 2019-0527-JTL
Defendant AmerisourceBergen Corporation is one of the world's largest wholesale distributors of opioid pain medication. Its role in America's opioid epidemic has made it the target of numerous subpoenas, government investigations, and lawsuits. Two congressional investigations have concluded that AmerisourceBergen failed to identify and address suspicious orders of opioids, contrary to the requirements of federal law. The federal Drug [*2] Enforcement Administration (the "DEA") and federal prosecutors in nine states have subpoenaed its documents. It is a defendant in multi-district litigation brought by cities, counties, Indian tribes, union pension funds, and the attorneys general of virtually every state. AmerisourceBergen and the other opioid-distributor defendants have offered to settle with the state attorneys general for $10 billion. Analysts have estimated that resolving all of the litigation would require $100 billion. AmerisourceBergen already has spent more than $1 billion in connection with the opioid-related lawsuits and investigations.
The plaintiffs own stock in AmerisourceBergen. They are investigating whether the firm engaged in wrongdoing in connection with the distribution of opioids. As part of their investigation, the plaintiffs sought to inspect AmerisourceBergen's books and records pursuant to Section 220 of the Delaware General Corporation Law. AmerisourceBergen rejected the plaintiffs' request in its entirety, contending that the plaintiffs lacked a proper purpose, and alternatively, the scope of the requested inspection was overly broad. The plaintiffs filed this action to enforce their statutory inspection [*3] rights.
The plaintiffs have proven that they have proper purposes to conduct an inspection, and they have established their right to inspect what this decision refers to as Formal Board Materials. The record is inadequate to determine whether the plaintiffs can inspect any other materials because AmerisourceBergen refused to provide any discovery into what types of books and records exist, how they are maintained, and who has them. The plaintiffs have leave to take a Rule 30(b)(6) deposition to explore these issues. If the plaintiffs believe that they are entitled to additional books and records after reviewing the Formal Board Materials and taking the Rule 30(b)(6) deposition, then they may make an additional application.
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2020 Del. Ch. LEXIS 17 *; 2020 WL 132752
LEBANON COUNTY EMPLOYEES' RETIREMENT FUND and TEAMSTERS LOCAL 443 HEALTH SERVICES & INSURANCE PLAN, Plaintiffs, v. AMERISOURCEBERGEN CORPORATION, Defendant.
Notice: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
stockholder, wrongdoing, books and records, opioid, inspection, investigate, orders, credible, suspicious, documents, compliance, pharmacies, proper purpose, infer, mismanagement, distributors, plaintiffs', lawsuits, discovery, purposes, monitoring, actionable claim, prescriptions, fiduciaries, customers, diversion, shipped, preponderance of evidence, board of directors, oversight
Business & Corporate Law, Record Inspection & Maintenance, Inspection Rights, Shareholders, Evidence, Burdens of Proof, Preponderance of Evidence, Actions Against Corporations, Derivative Actions, Procedural Matters, Civil Procedure, Special Proceedings, Class Actions, Derivative Actions, Standing, Demands, Futility, Demand Futility, Directors & Officers, Management Duties & Liabilities, Fiduciary Duties, Fiduciary Duties, Duty of Good Faith, Duty of Loyalty, Methods of Discovery, Interrogatories, Purpose & Use of Interrogatories