## Facts

- KT4 Partners LLC was a stockholder of Palantir Technologies Inc., a privately held company.
- KT4 made a demand under DGCL § 220 to inspect books and records to investigate suspected wrongdoing concerning: (1) repeated failures to hold annual stockholder meetings; (2) amendments to an Investors’ Rights Agreement (IRA) that allegedly reduced contractual information rights after KT4 sought to exercise them; and (3) alleged failures to provide contractual notices and opportunities tied to stock-transfer rights (e.g., rights of first refusal/co-sale/first offer).
- After a trial, the Court of Chancery found KT4 had a proper purpose and ordered production of various traditional corporate records.
- The Court of Chancery denied KT4’s request for emails related to the IRA amendments.
- The Court of Chancery imposed a use restriction limiting KT4’s use of produced materials to litigation in the Delaware Court of Chancery, with limited exceptions.
- KT4 appealed the denial of emails and the breadth of the use restriction.

## Issues

1. In a DGCL § 220 action, when traditional corporate records are inadequate because key decisions were handled via electronic communications, are relevant emails “necessary and essential” and therefore within the proper scope of inspection?
2. Did the Court of Chancery abuse its discretion by refusing to moderate a Delaware-only (Chancery-only) use restriction when the suspected wrongdoing centered on California-governed contracts and California-based parties?

## Decision

- The Supreme Court affirmed in part, reversed in part, and remanded.
- The Court held the Court of Chancery erred by denying inspection of emails concerning the IRA amendments where Palantir conducted relevant corporate business via email and traditional records were insufficient.
- The Court held the Court of Chancery abused its discretion by refusing to temper the forum/use restriction; the rationale for confining use to Delaware Chancery was weak given the California-centered contractual disputes.
- The Court otherwise upheld the Chancery Court’s findings on proper purpose and the ordered production of non-email documents.

## Legal Principles

- Under DGCL § 220, a stockholder must show a proper purpose (including investigating possible wrongdoing) to obtain books and records.
- The scope of inspection is limited to materials that are “necessary and essential” to the stated purpose; § 220 inspection is narrower than civil discovery.
- The “necessary and essential” inquiry is functional; if a corporation conducts formal business through electronic communications and lacks sufficient formal board-level records, emails can be required as § 220 “books and records,” subject to tailored limits.
- Courts may impose confidentiality and use restrictions on § 220 productions, but restrictions must rest on reasonable grounds and be calibrated to the dispute, including the governing law and practical forum considerations.

## Conclusion

The Delaware Supreme Court required Palantir to produce targeted emails when they were essential to KT4’s investigative purpose under § 220 and directed that the inspection use restriction be moderated because an inflexible Delaware Chancery-only limitation was not reasonably justified on the facts.


KT4 Partners LLC v. Palantir Techs. Inc., 203 A.3d 738 (Del. 2019)