Insight

Delaware Supreme Court Affirms Decision Considering Post-Demand Evidence in Stockholder’s Books and Records Action

The Delaware Supreme Court held that the Court of Chancery did not err in considering post-demand evidence and information reported from confidential sources.

K. Tyler O'Connell

Written by K. Tyler O'Connell

Published: August 21, 2026

In Paramount Global v. State of Rhode Island Office of the General Treasurer, __ A.3d __, 2026 WL 820647 (Del. Mar. 26, 2026), the Delaware Supreme Court, sitting en banc, affirmed the Delaware Court of Chancery’s decision that a stockholder had a credible basis to suspect wrongdoing in connection with the sale of Paramount Global. In doing so, the high court held that the Court of Chancery did not err in considering post-demand evidence and information reported from confidential sources.

In 2024, a stockholder-plaintiff sought to investigate potential wrongdoing based on articles suggesting that Shari Redstone, in her capacity as Paramount’s ultimate controlling stockholder, attempted to block the sale of Paramount in favor of a sale of just her controlling interest. The sale process continued after the books and records action was filed. News reports indicated that Redstone tried to walk away from the potential transaction due to, inter alia, the lack of sufficient consideration for her high voting shares, and the absence of indemnification for her personally. Paramount’s public filings also confirmed the resignations of special committee members and the removal of Paramount’s chief executive officer, all purportedly due to clashes with Redstone over the transaction. On appeal from a trial before a Magistrate in Chancery, Vice Chancellor J. Travis Laster held the stockholder had a credible basis to suspect wrongdoing, reasoning that the court could properly consider post-demand developments and reporting based on confidential sources. The Delaware Supreme Court accepted Paramount’s interlocutory appeal.

Justice Gary F. Traynor authored the majority’s opinion, which reasoned, among other things, that there was “nothing in [8 Del. C.] Section 220’s text that prohibits the consideration of post-demand evidence.” The Supreme Court acknowledged competing policy considerations, including that “allowing post-demand evidence to be considered at trial does carry some risk that stockholders might serve thinly supported demands in the hope of backfilling their case for inspection with post-demand evidence.” But on the other hand, the court reasoned that a blanket prohibition could result in inefficiencies created by, for example, a repetitive process of updated demands and complaints. The high court reasoned it was “confident” in the Court of Chancery’s “ability to monitor its Section 220 docket and take appropriate steps to discourage abusive practices by stockholder plaintiffs.” The Supreme Court accordingly endorsed the following principles set forth in the Court of Chancery’s opinion below:

As a general matter, a stockholder should be limited to the evidence identified in a demand or what the stockholder knew at the time of demand because that constraint helps parties resolve Section 220 demands without judicial involvement. But there are settings when a stockholder can legitimately rely on post-demand evidence at trial, such as when a material event occurs after the demand but before trial, and when the stockholder’s reliance on those post-demand events does not prejudice the corporation.

The high court similarly affirmed the Court of Chancery’s decision to consider hearsay in confidentially sourced news reports in circumstances where, as the court-below found, the hearsay was sufficiently reliable. In doing so, the Supreme Court disagreed with Paramount’s characterization of the court’s finding as relying exclusively on publications’ reputations, when the court-below also considered issues like the number of articles, their level of specificity, and that parts of the articles had been confirmed in Paramount’s public filings.

While they agreed with the majority’s opinion concerning confidentially sourced hearsay, Chief Justice Collins J. Seitz Jr. and Justice Karen L. Valihura respectfully dissented from the majority’s holding allowing consideration of post-demand evidence in some circumstances. In their view, the “better choice” would be to “bar admission of post-demand evidence”, which would “discourage a premature race to the courthouse.” They pointed to, inter alia, Section 220’s five-business-day period for a corporation to consider a demand, which past decisions recognized was intended to guaranty “a brief litigation-free window” to address and possibly resolve the demand before litigation. They also reasoned that a discretionary case-by-case approach may lead to new disputes over whether developments are sufficiently “material,” potentially adding “one more layer of complexity” to a summary books and records proceeding.

Originally published in ALM's Delaware Business Court Insider

Trending Articles

What AI Visibility Means for Lawyers


by Josh Rupall and Bryan Driscoll

AI tools increasingly interpret lawyers public information. Clear, consistent and credible sources help ensure they describe legal expertise accurately.

AI dashboard visualizing a lawyer's online profile, reputation, and practice information across mult

Recognizing Legal Leaders: The 2027 Best Lawyers Awards in Australia, Japan and Singapore


by Jamilla Tabbara

Market drivers, diversity trends and the elite practitioners shaping the legal landscape.

Illustrated maps of Australia, Japan and Singapore displayed with their national flags, representing

Musk v. Altman: The Lawyers Behind the Case


by Jamilla Tabbara

Meet the Trial Lawyers Shaping One of AI's Biggest Legal Disputes.

Portrait photos of Elon Musk and Sam Altman positioned in front of the OpenAI logo.

Can You Go to Jail at an Arraignment?


by Bryan Driscoll

Understanding What Happens at Your First Court Appearance.

A heavy chain lying on the ground in the foreground with a blurred figure standing in the background

Announcing the 2027 Best Lawyers Awards: Austria, Germany and Switzerland


by Jamilla Tabbara

Celebrating the legal professionals throughout Central Europe.

Graphic displaying three-dimensional map cutouts of Austria, Germany and Switzerland.

The Legal Teams Behind the Blake Lively–Justin Baldoni Settlement


by Grace Greer

A closer look at the legal teams and attorneys involved in the Blake Lively–Justin Baldoni litigation and its resolution.

Split-screen image of Blake Lively and Justin Baldoni

The Best Lawyers in France 2027: Peer-Reviewed Excellence


by Jamilla Tabbara

Seventeen editions of peer trust, a growing profession and a dynamic legal market.

3D Map of France with National Flag Graphic

What Disqualifies You From Filing Bankruptcies


by Bryan Driscoll

A guide to navigating eligibility, the means test and the legal hurdles of declaring bankruptcy.

A silhouette of a large hand pushing over a row of falling dominos toward a small figure standing be

Colorado’s 2026 Water Rights Battles


by Bryan Driscoll

A new era of conflict begins.

Colorado Water Rights 2026: A New Era of Conflict headline

What Happens if You Don't File Taxes


by Bryan Driscoll

The penalties are real, but so are your options. Here's what the IRS can do and what you can do about it.

A torn dollar bill revealing a watchful eye, surrounded by flying documents

2027 Best Lawyers Awards: Honoring Excellence in the Legal Profession


by Jamilla Tabbara

Recognizing the outstanding attorneys leading top practice areas nationwide.

United States with American flag representing The Best Lawyers in America 2027 awards

New England's Climate Litigation Surge


by Bryan Driscoll

What law firms need to know

New England's Climate Litigation Surge: What Firms Must Know headline

How to Start a Class Action Lawsuit


by Bryan Driscoll

Understanding the legal requirements, costs and process of filing a class action.

A group of miniature figurines standing united behind a bold "Class Action" placard.

What Is a Quitclaim Deed? Uses, Risks and When to Get Help


by Bryan Driscoll

A quitclaim deed can be one of the fastest ways to transfer property but knowing when it's the right tool and when it isn't, can save you from serious legal and financial headaches down the road.

One hand holding a wooden house model and another holding house keys.

An Employee's Guide to Non-Disclosure Agreements (NDA)


by Bryan Driscoll

Before you sign anything, here's what you need to know about non-disclosure agreements.

Figure stands before an open giant book, holding a large key, facing a keyhole on the inner page.

How to Optimize Your Best Lawyers Profile for AI Search


by Everett Sizemore

Learn how a complete, well-structured Best Lawyers profile can strengthen your visibility and accuracy across AI search platforms.

A laptop screen displaying the Best Lawyers profile dashboard showing customizable sections.