## Facts

- NCR Corp., a Maryland corporation with its principal place of business in Ohio, conducted substantial business in New York and had many New York shareholders.
- AT&T acquired a small stake in NCR and launched a hostile tender offer; after NCR’s board rejected the offer, AT&T sought a special shareholders’ meeting to replace directors.
- To contact NCR shareholders during the tender offer and proxy contest, AT&T and two New York resident NCR shareholders (the Sadlers) demanded (1) NCR’s record shareholder list and (2) a “NOBO list” of beneficial owners who did not object to disclosure.
- The Sadlers met New York’s statutory eligibility requirements (New York residency and more than six months’ share ownership); AT&T did not.
- AT&T arranged for the Sadlers to make the formal demand and agreed to indemnify them for costs; NCR argued the Sadlers were acting as AT&T’s agents and thus were improper demanders.
- NCR refused to provide either list, contending New York’s statute did not apply as requested, did not reach NOBO lists, and would unconstitutionally burden interstate commerce because Maryland law was more restrictive.

## Issues

1. Whether N.Y. Bus. Corp. Law § 1315 permits New York resident shareholders who satisfy the statute’s requirements to obtain shareholder lists when acting in concert with, and indemnified by, a non-qualifying third party.
2. Whether § 1315’s reference to a “record of shareholders” authorizes an order requiring the corporation to compile and produce a NOBO list.
3. Whether applying § 1315 to compel a Maryland corporation doing business in New York to provide these lists violates the Commerce Clause.

## Decision

- The Second Circuit affirmed the order compelling NCR to produce the record shareholder list and to compile and produce the NOBO list.
- The court held the Sadlers were proper requesters under § 1315 despite AT&T’s involvement, absent bad faith and given satisfaction of the statute’s eligibility criteria.
- The court construed § 1315 broadly to cover access reasonably necessary for shareholder communication in a proxy contest, including a NOBO list.
- The court rejected NCR’s Commerce Clause challenge because there was no direct conflict with Maryland law and no impermissible burden from New York imposing disclosure duties on a foreign corporation doing business in the state.

## Legal Principles

- A forum state may grant resident shareholders inspection rights against a foreign corporation doing business in the state, and such statutes may be construed broadly to facilitate shareholder communication.
- Statutory inspection rights are not defeated merely because an otherwise eligible shareholder coordinates with a third party that would not independently qualify, absent bad faith or failure to meet statutory conditions.
- An inspection statute may require production of compilations (such as NOBO lists) when reasonably related to the statute’s purpose and not unduly burdensome to prepare.
- Applying a forum state’s shareholder-list disclosure requirements to foreign corporations operating within the state does not violate the Commerce Clause where the law of the state of incorporation does not prohibit disclosure and no inconsistent regulatory regime is created.

## Conclusion

The court required NCR, a foreign corporation doing business in New York, to provide record and NOBO shareholder information to eligible New York shareholders for use in a proxy contest, holding that § 1315 applied notwithstanding AT&T’s participation and that the compelled disclosure did not offend the Commerce Clause.


Sadler v. NCR Corp., 928 F.2d 48 (2d Cir. 1991)