In a closely watched en banc decision, Paramount Global v. State of Rhode Island Office of the General Treasurer, the Delaware Supreme Court affirmed the Court of Chancery's ruling that post-demand evidence—including publicly available news articles and SEC filings that surface after a stockholder serves a books-and-records demand—may be considered in determining whether a stockholder has demonstrated a "credible basis" to inspect corporate books and records under Section 220 of the Delaware General Corporation Law.

Background

The case arose from the protracted sale process surrounding Paramount Global. Shari Redstone, through her control of National Amusements, Inc., held a supermajority of Paramount's voting shares. Beginning in late 2023, a series of news reports—citing confidential sources close to the negotiations—chronicled the various acquisition bids Redstone entertained for National Amusements and Paramount, including offers from Apollo, Sony, Byron Allen, and Skydance Media. 

On April 5, 2024, the Employees' Retirement System of Rhode Island served Paramount with a Section 220 demand, alleging that Redstone and National Amusements had usurped Paramount's corporate opportunity by channeling potential acquirers toward a purchase of National Amusements rather than a sale of the entire company. After the demand was served, additional news articles and Paramount's own SEC filings partially confirmed and extended the pre-demand reporting. 

A Magistrate in Chancery refused to consider the post-demand evidence and found no credible basis to suspect wrongdoing, but the Vice Chancellor reversed on de novo review, holding that “there are settings when a stockholder can legitimately rely at trial on post-demand evidence.” 

The Court's Reasoning on Post-Demand Public Articles and Alerts

The heart of the opinion addressed whether publicly available news articles and alerts published after the stockholder's demand can be considered when assessing the "credible basis" standard. The Supreme Court's reasoning on this point warrants close attention.

The statute does not prohibit it. The Court rejected Paramount's argument that Section 220(c)'s requirement that a stockholder "first establish" a proper purpose locks the evidentiary record to what was known at the time of the demand. The Court held that this language merely describes what a stockholder must prove to obtain a court order compelling inspection—a showing necessarily made well after the demand is served. The Court found “nothing in § 220's text that prohibits the consideration of post-demand evidence.” 

The case law does not support a bright-line rule. Paramount pointed to several transcript rulings in which the Court of Chancery had declined to consider post-demand evidence. The Supreme Court methodically distinguished each, finding that in nearly every case, the exclusion was based on the nature of the evidence (e.g., circular discovery attempts) rather than its timing. In fact, the Court noted its own recent precedent in Wong Leung Revocable Trust v. Amazon.com, Inc., where the Court relied on a post-demand federal court ruling in finding a credible basis.

Post-demand public reporting is uniquely suited for consideration. The Court emphasized that Rhode Island's post-demand evidence was not obtained through improper discovery. Rather, it “was made known to the public through news accounts and Paramount's public disclosures.” This distinction is critical: the Court drew a clear line between a stockholder exploiting the discovery process to circumvent the summary nature of Section 220 proceedings and a stockholder relying on publicly available articles and corporate filings that organically came to light after the demand was served.

Case-by-case discretion, not a categorical rule. The Court ultimately endorsed the Court of Chancery's approach: the general rule is that a stockholder will be limited to evidence identified in the demand and available at the time of demand, but under "exceptional circumstances," the Court of Chancery may, “in the exercise of its sound discretion, consider post-demand evidence that is material to the court's credible-basis inquiry and not prejudicial to the corporation.”

No prejudice from post-demand public articles. The Court also rejected Paramount's claim of prejudice. Notably, the post-demand articles pertained to the company's own conduct, the parties had stipulated to the admissibility of certain post-demand evidence, and Paramount itself had offered post-demand evidence at trial without objection. 

The Dissent

Chief Justice Seitz and Justice Valihura dissented on the post-demand evidence question, arguing that a bright-line rule barring post-demand evidence would discourage premature demands and preserve the summary nature of Section 220 proceedings. The dissent warned that the majority's approach would add "one more layer of complexity" to “what should be a summary proceeding” as parties litigate what post-demand events are sufficiently "material" to warrant consideration.

Key Takeaways

For stockholders: This decision potentially opens the door to relying on publicly available news articles and corporate filings that emerge after a demand is served—particularly when they corroborate or extend the factual basis for a pre-demand suspicion of wrongdoing. Stockholders would no longer need to "go back to square one" with a new demand every time material public reporting surfaces after the original demand.

For corporations: The decision is not a blank check. The Court endorsed the general rule that stockholders should ordinarily be confined to evidence available at the time of demand, and carved out an exception only for "exceptional circumstances" involving material, non-prejudicial evidence. Corporations should be aware, however, that publicly available articles and alerts about their own conduct are the type of post-demand evidence that may be admitted.

On hearsay and news sources: The Court unanimously upheld the use of confidentially sourced news articles from reputable outlets, so long as the trial court conducts a fact-specific reliability analysis considering factors such as the number of articles, corroboration by public filings, the specificity of the reporting, and the reputation of both the outlet and the journalists. 

Practical impact: The 3-2 split signals that this area of the law remains contested. Litigants should expect continued development of the "exceptional circumstances" framework, particularly around what constitutes a "material event" and how prejudice to the corporation will be assessed. The dissent's concerns about premature demands may also inform future legislative reform of Section 220, which was recently amended in March 2025.