## Facts

- JUUL Labs, Inc. was a privately held Delaware corporation with its principal executive office in California.
- Daniel Grove, a JUUL stockholder and former employee, made a written demand to inspect JUUL’s books and records under California Corporations Code § 1601.
- Grove indicated he might sue in California state court if JUUL refused inspection under § 1601.
- JUUL filed an action in the Delaware Court of Chancery seeking declaratory relief that (i) Delaware law governed Grove’s inspection rights and (ii) JUUL had no obligation to produce books and records except as required by DGCL § 220.
- The day after JUUL sued in Delaware, Grove filed a California action to compel inspection under § 1601.
- JUUL argued Grove had contractually waived inspection rights through multiple agreements and that JUUL’s charter forum-selection clause required stockholder litigation, including inspection disputes, to proceed exclusively in Delaware.

## Issues

1. Whether Grove contractually waived or was otherwise barred from invoking California Corporations Code § 1601 to demand inspection.
2. Whether stockholder inspection rights for a Delaware corporation are governed exclusively by Delaware law under the internal-affairs doctrine, notwithstanding California Corporations Code § 1601.
3. Whether JUUL’s charter forum-selection clause required inspection-right litigation to be brought only in Delaware.

## Decision

- On cross-motions for judgment on the pleadings, the court granted JUUL relief in part.
- The court held Grove did not contractually waive the ability to invoke California § 1601.
- The court held stockholder inspection rights are a core matter of internal corporate affairs; therefore Delaware law (DGCL § 220) governed the scope of Grove’s inspection rights.
- The court enforced Delaware as the exclusive forum for litigating Grove’s inspection rights, consistent with the internal-affairs doctrine and JUUL’s charter forum-selection provision.

## Legal Principles

- Stockholder inspection rights are part of a corporation’s internal affairs and are governed by the law of the state of incorporation.
- A non-forum state’s inspection statute cannot be applied to a foreign-incorporated corporation to expand or conflict with the incorporating state’s regulation of stockholder–corporation relations.
- Contractual provisions addressing inspection rights must clearly reach the asserted source of rights; agreements limited to DGCL § 220 (or to specific holders) do not, without more, waive other asserted statutory avenues.
- A charter-based forum-selection clause may require that internal-affairs disputes, including inspection claims, be litigated exclusively in Delaware courts.

## Conclusion

The court concluded that although Grove had not contractually waived reliance on California’s inspection statute, his inspection rights as a stockholder of a Delaware corporation were governed by DGCL § 220 as an internal-affairs matter, and any effort to enforce those rights had to proceed in Delaware under the charter’s forum-selection provision.


JUUL Labs, Inc. v. Grove, 238 A.3d 904 (Del. Ch. 2020)