## Facts

- NavLink, Inc. is a Delaware corporation that provides information-technology services and operates in the Middle East, with headquarters in Lebanon.
- George Chammas and Laurent Delifer co-founded NavLink, previously served as senior executives, and remained sitting directors after being removed from management.
- NavLink’s ownership and board composition were influenced by two large stockholders (AT&T and Ooredoo), each owning a significant stake and appointing directors.
- Chammas and Delifer believed they were being excluded from board information flows and decisionmaking, including through “pre-board” meetings and coordination among management and the other directors outside their presence.
- Their concerns sharpened after events involving board minutes:
  - At an April 27, 2015 board meeting, the board chair referenced that draft minutes from a November 17, 2014 meeting had been circulated promptly after that meeting.
  - Chammas and Delifer asserted they did not receive those draft minutes until shortly before the April 2015 meeting.
  - After requesting the email that allegedly circulated the draft minutes, the corporate secretary and chair initially claimed they could not locate it and made statements that Chammas and Delifer contended were false or misleading.
  - Later, information produced in the action showed an email sending draft minutes to the chair, supporting the founders’ claim that drafts were circulated selectively.
- Chammas and Delifer also raised concerns about corporate actions they believed favored the major stockholders at the expense of other stockholders and about whether minutes and related communications accurately reflected board process.
- A major operational matter involved Saudi Telecom Company (STC), a significant customer:
  - Contract addenda were projected to generate substantial annual revenue for NavLink.
  - STC asked to terminate certain addenda early, and NavLink’s CEO brought the issue to the board to consider options and a response.
- Acting in their capacity as directors, Chammas and Delifer pursued a books-and-records action under 8 Del. C. § 220(d) seeking categories of records including:
  - Communications about NavLink between management and the other directors.
  - Communications between the board chair and the other directors.
  - Communications concerning preparation of draft board minutes by board secretaries.
  - STC-related documents and communications, along with other board-level materials tied to planning and governance (including materials connected to the annual meeting).
- NavLink resisted, arguing the requests were overbroad, were being used to support other litigation, and implicated attorney-client privilege—especially regarding communications with counsel about the annual meeting.

## Issues

1. Whether sitting directors, proceeding under 8 Del. C. § 220(d), were entitled to inspect broad categories of corporate records and communications to carry out their duties.
2. Whether alleged collateral motives—such as using information in related litigation—defeated a director’s inspection demand when the demand was also tied to director oversight and board functions.
3. To what extent NavLink could withhold materials from sitting directors based on attorney-client privilege and claims that the requesting directors were adverse to the corporation on certain matters.
4. How the Court of Chancery should tailor the scope and conditions of production in a summary § 220(d) director-inspection proceeding.

## Decision

- The court largely granted the inspection demand, recognizing that directors’ statutory and fiduciary-based access to corporate information is generally much broader than a stockholder’s inspection right.
- The court found Chammas and Delifer showed a good-faith basis and director-related reasons for seeking records, including evaluating board process, assessing the accuracy and handling of minutes, and monitoring significant business matters such as the STC contract situation.
- The court rejected NavLink’s attempt to defeat inspection based solely on the possibility that the directors might use documents in other disputes; that possibility did not negate a proper director purpose where the information also related to director responsibilities.
- The court ordered production of responsive materials across most business and governance categories, while applying reasonable limits to keep the production tied to the directors’ stated needs and to maintain the summary character of the proceeding.
- The court treated attorney-client materials differently, limiting access to certain communications with company counsel regarding the annual meeting where NavLink showed a basis to treat the plaintiffs as adverse on that subject and to preserve privilege for those communications.
- Consistent with earlier management of the case, the court declined to permit the § 220(d) action to become plenary discovery, permitting only what was appropriate to resolve defenses and define the proper scope of inspection.

## Legal Principles

- Sitting directors generally have a strong, near-plenary right to inspect corporate books and records that relate to their duties, because directors must be informed to satisfy fiduciary obligations.
- In a director inspection case, the corporation bears a heavy burden to justify denying access to information a director seeks in good faith for a purpose related to director service.
- The fact that a director may use inspected materials in other litigation does not, by itself, defeat inspection when the request is also connected to board oversight and corporate governance functions.
- Attorney-client privilege can limit director access in narrow circumstances: where the corporation demonstrates sufficient adversity between the director and the corporation (or a board subset) on a particular legal matter, privileged communications about that matter may be withheld from the adverse director.
- A § 220 proceeding is summary in nature; the court will limit attempts to convert the action into open-ended Rule 26 discovery and will tailor production to what is reasonably needed for the director’s stated, duty-related purposes.

## Conclusion

Chammas v. NavLink held that sitting directors were entitled under § 220(d) to inspect most categories of NavLink’s records and communications to assess board process, information flow, and major business issues (including the STC matter), notwithstanding arguments that the founders sought materials for related disputes; however, the court limited access to certain privileged communications with counsel about the annual meeting where the directors were shown to be adverse on that subject and kept the case on a summary inspection track rather than full discovery.


Chammas v. NavLink, Inc., 2016 WL 767714 (2016)