## Facts

- Wachovia Corporation announced it had entered into a merger agreement with First Union Corporation that would be submitted to Wachovia shareholders for approval at an upcoming shareholder meeting.
- SunTrust Banks, Inc. made an unsolicited competing proposal to merge with Wachovia, which Wachovia’s board rejected.
- Theodore Hoepner was a Wachovia shareholder and also a vice president of SunTrust.
- Hoepner made a written demand under North Carolina’s corporate inspection statute (N.C. Gen. Stat. § 55-16-02) to inspect and copy Wachovia’s shareholder list and related information.
- Hoepner stated that he sought the shareholder list so he could communicate with Wachovia shareholders regarding the pending merger vote and the alternative SunTrust transaction.
- Hoepner expressly disclosed that he intended to provide the shareholder list to SunTrust so SunTrust could solicit proxies in support of the SunTrust proposal.
- Wachovia refused to produce the shareholder list, asserting that Hoepner’s intent to share the list with SunTrust showed the demand was not made in good faith and not for a proper purpose.
- Hoepner filed suit to compel inspection and sought summary judgment, also requesting his litigation expenses.

## Issues

1. Whether a shareholder’s demand to inspect and copy a corporation’s shareholder list, made to communicate with shareholders and support proxy solicitation concerning a pending merger vote, satisfies the “good faith” and “proper purpose” requirements of N.C. Gen. Stat. § 55-16-02 when the shareholder intends to share the list with a nonshareholder competing bidder.
2. Whether Hoepner was entitled to recover expenses associated with enforcing his inspection demand.

## Decision

- The court granted summary judgment for Hoepner on his inspection claim.
- The court ordered Wachovia to allow Hoepner to inspect and copy the shareholder list (and the related list information requested under the statute).
- The court concluded Hoepner’s stated purpose—communicating with shareholders and supporting proxy solicitation regarding the merger vote—was reasonably related to his interests as a Wachovia shareholder and therefore was a proper purpose.
- The court rejected Wachovia’s argument that Hoepner’s intent to share the list with SunTrust, standing alone, showed lack of good faith or an improper purpose.
- The court addressed Hoepner’s request for expenses under the statute’s remedial provisions in connection with the relief ordered.

## Legal Principles

- A qualifying shareholder may inspect and copy a corporation’s shareholder list if the shareholder complies with statutory prerequisites and the demand is made in good faith and for a proper purpose reasonably related to the shareholder’s interest as a shareholder. (N.C. Gen. Stat. § 55-16-02)
- Communicating with other shareholders about matters submitted for shareholder approval—such as a merger and related proxy solicitation—is a proper purpose for seeking a shareholder list.
- Once a shareholder satisfies the statutory prerequisites for inspection, the corporation must justify any refusal based on the statute’s limits (including lack of good faith or improper purpose).
- A shareholder does not lose inspection rights merely because the shareholder plans to share the list with a third party whose efforts align with the shareholder’s stated voting-related purpose.
- The inspection statute contains remedies, including potential expense-shifting, when a shareholder must sue to obtain records the shareholder is entitled to inspect.

## Conclusion

Hoepner v. Wachovia Corp. held that a Wachovia shareholder seeking the shareholder list to communicate with fellow shareholders and aid proxy solicitation in a contested merger vote stated a proper, shareholder-related purpose under N.C. Gen. Stat. § 55-16-02, even though he intended to provide the list to SunTrust, the competing bidder; the court therefore ordered Wachovia to produce the list and addressed statutory remedies associated with the compelled inspection.


Hoepner v. Wachovia Corp., 2001 WL 34000145 (2001)